WASHINGTON -- Sales of new homes dipped slightly in October compared with September but remain well above levels of a year ago, with lower mortgage rates helping spur a rebound in purchases.

The annual rate of single-family new-home sales slipped 0.7% last month to a seasonally adjusted 733,000, the Commerce Department said Tuesday. But that decline followed robust gains of 4.5% in September and 7% in August.

Sales of both new and existing homes have been on an upswing since summer, lifted by lower borrowing rates. Residential construction added to overall economic growth in the July-September quarter after a long period of declines. Most economists expect this strength to continue.

In October, sales of new homes were up in the Midwest and West but fell in the Northeast and South.

The Northeast suffered the biggest drop-off in sales last month -- a decline of 18.2%. Purchases were down 3.3% in the South. They rose 7.1% in the West and 4.2% in the Midwest.

Overall, new home sales in October were up a hefty 31.6% compared with a year ago. Sales have been fueled in part by falling mortgage rates, which have been trending lower since the Federal Reserve switched from raising its benchmark rate four times last year to cutting rates three times this year.

The median price of a new home sold in October was $316.700, 3.7% higher than a year ago.

The National Association of Realtors reported last week that sales in the much bigger market for existing homes rose 1.9% in October to a seasonally adjusted 5.46 million. That level was 4.6% higher than a year ago.

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