A forward-looking gauge of U.S. home sales edged up slightly in July after falling the previous month, suggesting the surge in momentum in the first half of the year could be leveling off. The National Association of Realtors said Thursday its pending home sales index, which is based on signings for purchases of previously owned homes, rose 0.5% to a seasonally-adjusted 110.9 in July, from an upwardly revised reading of 110.4 in June. Economists surveyed by The Wall Street Journal had expected a 1% rise in July. Home sales typically close within a couple of months after signing. "We are inclined to interpret the softness at the start of the quarter as payback after a strong performance at the beginning of 2015 and expect the housing market to remain in recovery mode," Barclays economist Blerina Uruci said in a note to clients. Pending sales also remained well above year-ago levels. The index rose 7.4% in July from a year earlier, the 11th consecutive annual increase. "Led by a solid gain in the Northeast, contract activity in most of the country held steady last month, which bodes well for existing-sales to maintain their recent elevated pace to close out the summer," said Lawrence Yun, chief economist for the Realtors' group. But Mr. Yun also warned that "available listings in affordable price ranges remain elusive for some buyers trying to reach the market and are likely holding back sales from being more robust." News Corp, owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors. Other recent data point to a healthy pickup in activity in the housing market this summer. The pace of completed existing-home sales increased 2% last month from June, the strongest since February 200, NAR said last week. Sales of new homes in July were 21% higher than a year earlier. Home-building also increased last month, thanks to a surge in construction of single-family homes, according to data from the Commerce Department. Builder sentiment is the highest it has been in a decade. Stronger job gains have also helped build momentum in the housing market, and interest rates remain at historic lows. The average interest rate for a 30-year fixed-rate mortgage was 4.05% in July, according to Freddie Mac, but was back down to 3.84% last week. Thursday's report suggests the big housing gains of the past few months could be over, said Ian Shepherdson, chief economist for Pantheon Macroeconomics, in a note to clients. "But we see no reason to expect an extended decline," Mr. Shepherdson said. "Mortgage applications are steady and could even rise over the next couple of months, thanks to the latest drop in rates; employment growth is robust and credit conditions are gradually easing. The existing homes market looks to us to be in pretty good shape." Recent stock market volatility could cause some buyers to delay buying a home out of an abundance of caution, Mr. Yun said, but overall the prospects for continued strength in the housing market "remain intact for now." The readings were mixed across regions. According to Thursday's report, pending home sales rose 4% in the Northeast and 0.6% in the South. They fell by 1.4% in the West, and were unchanged in the Midwest.