WASHINGTON (Reuters) - Contracts to buy U.S. previously owned homes plunged to a record low in January as higher mortgage rates and house prices reduced affordability for prospective buyers.

The National Association of Realtors (NAR) said on Thursday its Pending Home Sales Index, based on signed contracts, dropped 4.6% last month to 70.6, an all-time low.

Economists polled by Reuters had forecast contracts, which become sales after a month or two, falling 1.3% in January. Pending home sales decreased 5.2% from a year earlier.

"It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months," said Lawrence Yun, the NAR's chief economist. "However, it's evident that elevated home prices and higher mortgage rates strained affordability."

Signed contracts fell in the Midwest, South and West, but rose slightly in the Northeast.

Data from the Federal Housing Finance Agency on Tuesday showed house prices increased 4.7% in the 12 months through December. Higher mortgage rates have combined with elevated house prices to significantly erode affordability.

The average rate on the popular 30-year fixed-rate mortgage bounced around 7% in January, data from mortgage finance agency Freddie Mac showed. It has declined to about 6.85%.

Mortgage rates have remained elevated despite 100 basis points of Federal Reserve interest rate cuts since September. The U.S. central bank paused the rate cuts in January while it assesses the impact of the Trump administration's policies, such as tariffs, tax cuts and mass deportations of immigrants, which are viewed as inflationary by economists.

Mortgage rates track the yield on the 10-year Treasury note. Though the 10-year yield has dropped in recent days amid softer economic data, concerns about inflation will likely limit the scope of the decline. Consumers' inflation expectations have surged on fears that tariffs will increase goods prices.