Home resales rose in July as low interest rates and a modest improvement in the labor market helped home buying conditions, the National Association of Realtors said on Wednesday.

The NAR said existing home sales rose 2.3 percent to an annual rate of 4.47 million units last month. That was just below analysts' expectations of a 4.52 million-unit rate.

Nationwide, the median price for a home resale was $187,300 in July, 9.4 percent higher than in the same month a year earlier.

"Mortgage interest rates have been at record lows this year," said NAR chief economist Lawrence Yun, adding that the labor market was also showing signs of improvement. "Combined, these factors are helping to unleash pent up demand."

The U.S. housing market, which began falling into a deep rut six years ago, has been a relative bright spot in the economy this year. Home prices have shown signs of stabilizing and many economists think residential construction will give a slight boost to the economy this year.

But home building now plays a much smaller economic role than it did before the 2007-2009 recession, and a turn for the worse in the broader economy could easily undo housing's incipient recovery.

Barring potential problems from abroad like a worsening in Europe's debt crisis, most economists expect U.S. economic growth will pick up in the second half of the year but still be lackluster.

A separate report showed applications for U.S. home mortgages tumbled last week, with demand for refinancing drying up as mortgage rates jumped to their highest level since late June.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 7.4 percent in the week ended Aug 17.

Fixed 30-year mortgage rates jumped 10 basis points to average 3.86 percent. Even with the increase, rates are still at relatively cheap levels after falling to record lows in recent months.