Pending sales of US existing homes unexpectedly rose in February for the first time in three months as buyers took advantage of lower mortgage rates and slower price growth.

An index of contract signings climbed 1.8%, according to National Association of Realtors data released Tuesday. The median forecast of economists surveyed by Bloomberg was for a 0.6% decline. 

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The increase in February contract signings, when mortgage rates dipped to their lowest since 2022, is welcome news for the real estate market ahead of the spring selling season, when listings typically rise and activity picks up. Cheaper borrowing costs and slower price growth have led to a recent improvement in affordability.

"The slight gain in pending contracts appears to be driven by improved affordability conditions. However, those conditions could reverse if higher oil prices lead to an uptick in mortgage rates," NAR Chief Economist Lawrence Yun said in a statement.

In the first week of March, mortgage rates jumped by the most since September as war with Iran sparked concerns about inflation.

Housing affordability has been a key issue ahead of November's midterm election. President Donald Trump has taken several steps to boost home ownership, including signing two executive orders last week aimed at improving access to mortgage credit and easing environmental rules to speed up development projects.

Pending home sales in the South, the biggest home-selling region in the country, increased 2.7%. They rose 4.6% in the Midwest and edged up in the West. Contract signings dropped in the Northeast.

Pending-homes sales tend to be a leading indicator for previously owned homes, as houses typically go under contract a month or two before they're sold.