U.S. sales of newly built homes increased 1.3% in November from the prior month, a sign that low mortgage rates are pushing up purchases as well as prices.

The Commerce Department said Monday that new single-family houses sold at a seasonally adjusted annual rate of 719,000 last month. Sales surged in the Northeast and West, but they were flat in the Midwest and fell in the South.

New-home sales have increased 9.8% so far this year. The increase largely reflects a steady decline in mortgage rates, which has made borrowing cheaper and brought more people seeking to upgrade their house into the market.

Still, prices have moved upward as a result of construction lagging demand. The median new-home sales price was $330,800, up 7.3% from a year ago.

Demand has been stoked by a steady decline in mortgage rates over the past 12 months. The typical 30-year mortgage rate has fallen from roughly 4.9% a year ago to 3.8% this November. This decline in mortgage rates reflected the broader global economic slowdown, rate cuts by the Federal Reserve and uncertainty created in 2019 by President Donald Trump�s escalation of the trade war with China.

Despite the increase in sales, new construction has yet to increase enough to meet the potential demand. There was 5.4 months� supply of new houses on the market in November, down from 6.5 months� supply a year ago.

(AP)