WASHINGTON (Reuters) – Contracts to buy previously owned homes increased more than expected in August as the housing market continues to enjoy an uplift from lower mortgage rates.

The National Association of Realtors said on Thursday its pending home sales index rose 1.6% to a reading of 107.3. July’s index was unrevised. Compared to one year ago, pending sales were up 2.5%.

Economists polled by Reuters had forecast pending home sales increasing 0.9% in August. Pending home contracts are seen as a forward-looking indicator for the wellbeing of the housing market because they become sales within a couple of months.

The housing sector has rebounded in recent months in response to a sharp drop in mortgage rates. Data last week showed housing starts and building permits jumped to a more than 12-year high in August, and existing home sales rose to the highest level in 17 months.

In August, contracts increased across the nation’s four regions. Pending sales jumped 3.1% in the West and rose 1.4% in the Northeast and South. They edged up 0.6% in the Midwest.

“The notable sales slump in the West region over recent years appears to be over,” NAR chief economist Lawrence Yun said in a statement.

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