Contracts for pending sales of previously owned homes rose faster than expected in December after the prior month's sales were revised lower, data from a real estate trade group said on Thursday.

The National Association of Realtors Pending Home Sales Index, based on contracts signed in December, was up 2 percent to 93.7 from a downwardly revised reading of 91.9 in November.

Economists polled by Reuters had expected pending home sales to rise by 1.0 percent.

The index has risen in five of the last six months, though it is still 4.2 percent lower than the 97.8 level of a year ago.

Lawrence Yun, the association's chief economist, said the latest figures suggest sales activity is close to what he called a healthy level above 5 million units annually.

Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, Yun said.

(Reporting by Corbett B. Daly; Editing by James Dalgleish)