Pending home sales of previously owned homes in the U.S. reached its lowest level since the index was started in 2001. An index of homes under contract for sale dipped more than expected in February as consumer confidence hit a new low during this month, according to reports on Tuesday that strengthen worries of a recession.

The National Association of Realtors' (NAR) reported that the Pending Home Sales Index fell to 84.6 in February, down 1.9% from a revised reading of 86.2 in January and down 21.4% versus the same month last year.

"The slip in pending home sales implies we're not out of the woods yet," said Lawrence Yun, NAR chief economist, in a statement.

The Pending Home Sales Index is a more forward-looking home sales indicator than the Existing Home Sales report, which tracks sales at the time of closing, about a month after a sales contract is signed.

The index measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the Pending Home Sales Index looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.

During the start of the Pending Home Sales index in 2001, and an index of 100 is equal to results that first year. Before the housing market began to deteriorate last summer, the steepest decline in the index's history came in September 2001, when the 9/11 terrorist attack sent the index down to 89.8.

The Realtors revised their forecast slightly for existing home sales, projecting first-quarter existing home sales to decline 23.1% versus the same period last year after saying in March they would decline 23.2%.

For the full year, the NAR predicted existing home sales to be 4.7% lower than in 2007, after saying in March they would be down 4.8%.

The NAR also lowered its forecasts for first-quarter and full-year real GDP growth, the broadest measure of the nation's economic strength. It also cut its expectations for nonfarm job growth in the first-quarter and full-year periods.

With the home prices declining and a tightened credit, many economists say the housing market is expected to deteriorate further in the coming months, though some keep on being optimistic a bout a possible recovery in the latter part of the year.

Yun thinks that the economy will not grow in first half of the year, but he is optimistic about the second half.

"The combination of recent fiscal stimulus enactment and the lagged impact of monetary policy will help jump start the economy in the second half."