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WASHINGTON (April 29, 2013) - Pending home sales increased in March and remain above year-ago levels, but contract activity in recent months shows only modest movement, according to the National Association of Realtors®.

Mortgage applications climbed 2 percent last week as several key interest rates dropped, the Mortgage Bankers Association reports.

Mortgage applications for refinancings, which make up the biggest bulk of MBA's index, rose 3 percent for the week ending April 26, reaching its highest level since January. Meanwhile, mortgage applications for home purchases fell last week by 1.4 percent compared to a week earlier.

"Low interest rates have attracted new buyers and persuaded many home owners to refinance their mortgages," Dow Jones reports. "However, tightened credit restrictions still bar many borrowers from filing loan applications."

The 30-year fixed-rate mortgage averaged 3.6 percent last week, its lowest rate since December, MBA reports.