By Burton Frierson

NEW YORK (Reuters) - The pace of private-sector U.S. job losses slowed dramatically last month, while future planned layoffs also declined, and the hard-hit housing sector showed signs of improvement last week.

Wednesday's reports are the latest indications that the U.S. economy is pulling out of freefall and may even be preparing to stop its descent, adding to hopes that have fueled a stock market rally over the last two months.

In housing, the original epicenter of the economic crisis, U.S. mortgage applications rose last week, even as interest rates jumped to their highest levels since mid-March.

The total number of U.S. private-sector job losses were much less than expected in April, hitting its lowest level since November last year, according to a report by ADP Employer Services.

Meanwhile, planned layoffs at U.S. firms fell for a third consecutive month in April, hitting their lowest level since last October, a report by global outplacement consultancy Challenger, Gray & Christmas, Inc said.

"The mentality of economic improvement is taking hold," said John Spinello, chief fixed income technical strategist at Jefferies & Co in New York.

The data came ahead of Friday's more comprehensive non-farm payrolls report by the government.

Economists expect Friday's payrolls report to show the economy shed 620,000 jobs in April and the unemployment rate jumped to 8.9 percent from 8.5 percent.