Pending sales of existing U.S. homes fell more sharply than expected in July, partially erasing gains from the previous month, data from a real estate trade group showed on Tuesday.

The National Association of Realtors Pending Home Sales Index, based on contracts signed in July, was down 3.2 percent to 86.5 from an upwardly revised index of 89.4 in June.

Economists polled by Reuters ahead of the report were expecting pending home sales to decline by 1.0 percent.

The association's chief economist, Lawrence Yun, said the index was oscillating monthly but was essentially flat for many months now.