Contracts to buy previously owned homes rose to an eight-month high in March, the National Association of Realtors said on Tuesday.

The NAR's pending home sales index increased to a reading of 105.8, up 3.8 percent from the prior month and the highest since July. February's index was unrevised at 101.9.

Economists polled by Reuters had forecast pending home sales rising 1.1 percent last month.

Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later.

U.S. home sales tumbled in March as rising demand stoked by declining mortgage rates and slowing house price inflation continued to be frustrated by a lack of properties, especially in the lower-priced segment of the market.

Compared to one year ago, pending sales were down 1.2 percent, marking the 15th straight month of annual decreases.