(Reuters) - Pending home sales in the U.S. rose 1.6% in February, spurred by modest inventory increases and job gains, a report on Thursday said.

The National Association of Realtors (NAR) Pending Home Sales index rose 1.6% to 75.6 from a revised 74.4 the month prior. Economists expected a 1.5% increase, a Reuters poll showed.

On a yearly basis, pending home sales fell 7% in February.

"The high-cost regions in the Northeast and West experienced pullbacks due to affordability challenges," said Lawrence Yun, the NAR's chief economist. "Home prices rising faster than income growth is not healthy and adds challenges for first-time buyers."

Contracts on pending homes dropped in 2023 as prospective buyers faced shortened inventory and higher mortgage rates, tracking with the Federal Reserve's rate hike campaign. While the average 30-year fixed-rate has eased from two-decade highs in October -- falling to 6.87% for the week ended March 21, according to Freddie Mac -- foot traffic in the existing homes market is expected to stir as inventory recovers, according to the NAR.

On a monthly basis, the Midwest experienced the largest growth in pending sales in February at 10.6%. On a year-over-year basis, all regions experienced a decline in pending home sales.