The number of people who signed contracts to buy homes fell in July, further evidence that the depressed housing market remains a drag on the economy.

The National Association of Realtors says its index of sales agreements fell 1.3 percent in July to a reading of 89.7. A reading of 100 is considered healthy by economists. The last time the index reached that level was in April 2010, the final month that buyers could qualify for a federal tax credit.

Contract signings are usually a reliable indicator of where the housing market is headed. There's typically a one- to two-month lag between a sales contract and a completed deal.

But a growing number of buyers have cancelled contracts after appraisals showed the homes were worth less than they bid.