Contracts to buy previously owned U.S. homes dropped more than expected in June, weighed down by higher mortgage rates.

The National Association of Realtors said on Wednesday pending home sales, based on signed contracts, fell 0.8% last month. Economists polled by Reuters had forecast contracts, which become sales after a month or two, advancing 0.3%. Pending home sales decreased 2.8% from a year earlier.

"The data shows a continuation of small declines in contract signings despite inventory in the market increasing," said Lawrence Yun, the NAR's chief economist.