WASHINGTON—A gauge of upcoming home sales moved higher in September, a sign that last month's rebound in homebuying activity might be sustained in the coming months.

The National Association of Realtors said Thursday that its pending home sales index, which tracks contract signings for previously owned homes, rose 1.5% from August to a seasonally adjusted 110.0. Sales typically close within a month or two of signing.

Economists surveyed by The Wall Street Journal had expected a more modest increase of 1.0%.

The index has fluctuated in recent months. It was 111.2 in July and fell in August to 108.4, revised down slightly from an earlier estimate of 108.5, before partly rebounding in September. Compared with a year earlier, pending home sales in September were up 2.4%.

"Although depressed inventory levels are keeping home prices elevated in most of the country, steady job gains and growing evidence that wages are finally starting to tick up are encouraging more households to consider buying a home," said Lawrence Yun, the trade group's chief economist.

News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.

Purchases of existing homes, which account for roughly 90% of U.S. homebuying activity, peaked in June at an annualized sales rate of 5.57 million, the strongest monthly reading since February 2007. Sales weakened in July and August but rebounded in September, rising 3.2% from the prior month to a seasonally adjusted annual rate of 5.47 million, the National Association of Realtors said last week.

Borrowing costs remain low for prospective home buyers. The average interest rate on a 30-year fixed-rate mortgage in September was 3.46%, down from 3.89% a year earlier, according to Freddie Mac.

But tight inventory has put upward pressure on home prices, hindering some would-be buyers.

Federal Reserve officials in September judged that "the sluggishness in the housing sector appeared to have continued into the third quarter," according to minutes of their Sept. 20-21 policy meeting.

Write to Ben Leubsdorf at ben.leubsdorf@wsj.com

(END) Dow Jones Newswires

October 27, 2016 10:45 ET (14:45 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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