Contracts to buy previously owned homes rose more than expected in June, the National Association of Realtors said on Tuesday in a report that showed lower mortgage rates could be giving support to the housing market.

The NAR's pending home sales index rose to a reading of 108.3 last month, up 2.8% from the prior month. Economists polled by Reuters had forecast pending home sales would rise 0.5% in June.

May's index was unrevised at 105.4.

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.

Pending home sales were up 1.6% in the 12 months through June, snapping a 17-month streak of year-over-year decreases.