The number of Americans claiming new jobless benefits hit a three-month low last week and contracts to buy existing homes rose in June, hopeful signs for the economy which has struggled to regain momentum.

Initial claims for state unemployment benefits dropped 24,000 to a seasonally adjusted 398,000, the Labor Department said on Thursday, well below economists' expectations for a fall to 415,000.

A separate report from the National Association of Realtors showed pending home sales rose 2.4 percent, increasing for a second month. Actual sales usually follow a contract after a month or two.

The reports offered some relief after recent weak data and deadlocked talks to raise the nation's borrowing limit and avoid a damaging debt default and credit rating downgrade.

Claims provide some hints that the economy is going to do better in the third quarter, said Michael Strauss, chief economist at Commonfund in Wilton, Connecticut.

Assuming we don't get massive government furloughs because we don't get the debt limit raised in the next couple of days or couple of weeks, we would probably see GDP growth in the 3 percent range in the second half of year as opposed to sub 2 percent in the first half.

The labor market took a beating in May and June, with the increase in nonfarm payrolls totaling only 43,000.

WEAK HOUSING, JOBS FRUSTRATING RECOVERY

The government is expected to report on Friday that the economy grew at a 1.8 percent annual rate in the second quarter, according to a Reuters survey, after a tepid 1.9 percent pace in the first three months of the year.

On Wednesday, the Federal Reserve said growth slowed in much of the country in June and early July.

While the rise in pending home sales was encouraging, there has been an increase in contract cancellations because of problems with property valuations and a tight lending standards.

High cancellations pushed down home resales in June.

The weak housing and labor markets are high on the list of factors frustrating the economy's recovery from the 2007-09 recession.

But with claims dipping below the 400,000 mark that is normally associated with a stable labor market, there is reason to be cautiously optimistic.

The recent softness in the labor market may be beginning to subside, said Troy Davig, a senior economist at Barclays Capital in New York.

The full unwinding of the high gasoline prices and supply chain disruptions stemming from the Japanese earthquake, which led to much of the softness in the second quarter, will take time, but appears to be proceeding.

A Labor Department official said there were no special factors in last week's jobless claims data.

The four-week moving average of claims, considered a better measure of labor market trends, fell 8,500 to 413,750.

The number of people still receiving benefits under regular state programs after an initial week of aid declined 17,000 to 3.70 million in the week ended July 16.

Data for the so-called continuing claims covered the survey week for the household survey from which the unemployment rate is derived. The jobless rate rose to 9.2 percent in June from 9.1 percent in May.

The number of Americans on emergency unemployment benefits rose 18,427 to 3.17 million in the week ended July 9, the latest week for which data is available.

A total of 7.65 million people were claiming unemployment benefits during that period under all programs, up 320,152 from the prior week.

(Editing by Andrea Ricci)

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