Contracts to purchase previously owned homes rose in March, as the housing market continues to accelerate this year.

The National Association of Realtors said on Monday its Pending Sales Index, based on contracts signed last month, rose 1.5 percent to 105.7. Activity in recent months has shown modest improvements, and contracts last month reached the highest level since April 2010.

Economists polled by Reuters had expected signed contracts, which become sales after a month or two, to rise 1.0 percent after a previously reported 0.4 percent slip in February.

The housing upturn is expected to add support to the economy this year although there have been signs of weakness lately.

The inventory of homes for sale remains low, leading to a rise in home prices in most markets. The Realtors group said the market appears to be leveling off due to the supply shortage which has pushed up home values, putting a solid foundation under the housing recovery.

"Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply. Little movement is expected in near-term sale closings, but they should edge up modestly as the year progresses," said NAR chief economist Lawrence Yun in a statement.

Pending home sales were up 7.0 percent compared to March last year. Home resale contracts increased by sizable margins across the country in March, including a 40.7 percent spike in the Northeast.

(Reporting by Margaret Chadbourn; Editing by James Dalgleish)