WASHINGTON, Sept 29 (Reuters) - Contracts to buy U.S. previously owned homes rebounded to a seven-month high in August, but higher prices amid tight supply are slowing the housing market momentum. The National Association of Realtors (NAR) said on Wednesday its Pending Home Sales Index, based on signed contracts, jumped 8.1% last month to 119.5. That was the highest reading since January and followed two straight monthly declines. Economists polled by Reuters had forecast contracts, which become sales after a month or two, increasing 1.4%. Compared with a year ago, pending home sales fell 8.3% in August. The housing market boomed early in the COVID-19 pandemic amid an exodus from cities as people worked from home and took classes online. But the pandemic tailwind is fading as vaccines allow workers to return to offices. Expensive homes are also sidelining some first-time buyers from the market. The NAR reported last week that the share of first-time buyers was the smallest in more than 2-1/2 years in August. Existing home sales dropped last month. Data on Tuesday showed consumer sentiment towards buying a home weakening for a third straight month in September and house prices posting record gains in July from a year-ago. The surge in pending home sales last month was led by the South and Midwest regions, where the NAR said house price increases have been generally moderate relative to the rest of the country. Contracts soared 10.4% in the Midwest and vaulted 8.6% in the densely populated South. They rose 4.6% in the Northeast and advanced 7.2% in the West. (Reporting by Lucia Mutikani; Editing by Andrea Ricci) Our Standards: The Thomson Reuters Trust Principles.