WASHINGTON (Reuters) - Sales of new U.S. single-family homes rebounded in March from February's downwardly revised level, drawing support from a persistent shortage of previously owned houses on the market, but momentum could be curbed by a resurgence in mortgage rates.

New home sales jumped 8.8% to a seasonally adjusted annual rate of 693,000 units last month, the highest level since last September, the Commerce Department's Census Bureau said on Tuesday. The sales pace for February was revised down to 637,000 units from the previously reported 662,000 units.

Economists polled by Reuters had forecast new home sales, which account for more than 10% of U.S. home sales, advancing to a rate of 670,000 units.

New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis. Sales increased 8.3% on a year-on-year basis in March.

Though the new housing market remains underpinned by the dearth of previously owned homes for sale, rising mortgage rates are taking a toll on affordability.

Data last week showed single-family housing starts and building permits declined in March. Sentiment among single-family homebuilders was unchanged in April, with the National Association of Home Builders noting that "buyers are hesitating until they can better gauge where interest rates are headed."

The average rate on the popular 30-year fixed-rate mortgage has risen back above 7%, data from mortgage finance agency Freddie Mac showed, as strong reports on the labor market and inflation suggested the Federal Reserve could delay an anticipated rate cut this year. A few economists doubt that the U.S. central bank will lower borrowing costs in 2024.