Sales of new US single-family homes surged in August, but the boost from declining mortgage rates could be limited by a weakening labor market .

New home sales shot up 20.5% to a seasonally adjusted annualized rate of 800,000 units last month, the Commerce Department’s Census Bureau said on Wednesday.

The sales pace for July was revised higher to a rate of 664,000 units from the previously reported pace of 652,000 units.

New home sales shot up 20.5% to a seasonally adjusted annualized rate of 800,000 units last month. AP

Economists polled by Reuters had forecast new home sales, which make up about 14% of US home sales, easing to a rate of 650,000 units.

New home sales, which are counted at the signing of a contract, are volatile on a month-to-month basis and subject to big revision

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