WASHINGTON -- New contracts signed for home sales rose 1.5 percent last month to the highest level in nearly three years, though limited supply is causing the market to level off, the National Association of Realtors said Monday.
The trade group's Pending Home Sales Index rose to 105.7 in March, up from the previous month's 104.1 and exceeding analysts' expectations.
Compared to a year earlier, the index was up 7 percent last month, marking the 23rd straight month of year-over-year increases.
The last time the closely watched reading was as high was in April 2010, as people scrambled to sign contracts before the expiration of a special homebuyers tax credit.
New contracts for home sales last month increased the most -- 2.7 percent -- in Southern states. The West showed a 1.5 percent increase, while the Midwest was up 0.3 percent and the Northeast was flat.
The index was another indication of improvement in the housing market. But there are signs the recently hot real-estate market is cooling off, said Lawrence Yun, the group's chief economist.
"Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply," he said.
Yun expected closings to show little movement in the short term, but said that "they should edge up modestly as the year progresses."
The group expects existing home sales to rise to nearly 5 million sales this year, an increase of about 6.5 percent to 7 percent over 2012.
The median price for existing home sales is expected to rise about 7.5 percent.