Contracts to buy previously owned homes rose less than expected in March as a dearth of properties for sale once again constrained activity.

The National Association of Realtors said on Monday its pending home sales index nudged higher to a reading of 107.6, up 0.4 percent from February and the second consecutive monthly rise. January's index was slightly downwardly revised to 107.2.

Economists polled by Reuters had forecast pending home sales increasing 1.0 percent last month.

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

The housing market has regained some steam over the past couple of months after faltering at the turn of the year.

The sector has been bolstered by a strong economy with unemployment at a 17-year low but the continuing rise in house prices, exacerbated by a shortage of supply, has in particular left many first-time buyers unable to afford a property.

Compared to one year ago, pending sales were down 3.0 percent.

In March, contracts in the Northeast plunged 5.6 percent from the prior month and they fell 1.1 percent in the West. In the Midwest, they rose 2.4 percent, and in the South they gained 2.5 percent.

Only in the South were pending home sales higher than a year earlier.

"Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory,” NAR chief economist Lawrence Yun said in a statement.