The pace of Americans signing contracts to buy homes increased for a third straight month in December, raising an index of pending home sales by 0.5 percent.

The National Association of Realtors said Wednesday that its index of pending sales reached 110.1, up from a revised 109.6 in November. The index is now at its highest level since registering 111.3 in March.

More Americans are looking for homes as the economy has improved, though a shrinking supply of properties on the market has made the hunt difficult and driven up prices.

Low borrowing costs have somewhat offset the rise in home prices. But mortgage giant Freddie Mac said last week that the average rate on a 30-year fixed mortgage rose for a third straight week to 4.15 percent. That's the highest average rate since March.

The number of signed contracts rose in the South and West in December but declined in the Northeast and Midwest. A 5.1 percent decline in the Northeast was offset by a 2.6 percent gain in the South and a 1.5 percent increase in the West. Pending sales in the Midwest declined slightly by 0.3 percent.

Pending sales contracts are a barometer of future purchases. Sales typically follow a month or two after a signed contract.