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A forward looking gauge of the US housing market fell less than expected last month as a tight supply of homes continued to weigh on activity.

The pending home sales index fell 0.8 per cent in March, from the previous month when it rose 5.5 per cent, according to data from the National Association of Realtors. That was narrower than the 1 per cent drop that economists surveyed by Bloomberg had forecast.

The index fell in every region except the South, where it rose 1.2 per cent month-on-month.

While strong job growth, improving wages and mortgage rates that are low in historical terms have helped support housing activity, a tighter inventory of homes has driven up home prices and curbed buying.

“Home shoppers are coming out in droves this spring and competing with each other for the meager amount of listings in the affordable price range,” Lawrence Yun, chief economist at NAR, said.

Indeed, sellers remain in the driving seat as competition remains strong at the start of the spring selling season. “Buyers are showing resiliency given the challenging conditions” Mr Yun said. “However, at some point — and the sooner the better — price growth must ease to a healthier rate. Otherwise sales could slow if affordability conditions worsen.”

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