New-home sales in the U.S. increased to an almost 13-year high in June, fueled by record-low borrowing costs and adding to evidence that residential real estate is a bright spot for the economy.

Purchases of new single-family houses climbed 13.8% to a 776,000 annualized pace, from an upwardly revised May increase of 19.4%, government data showed Friday. The June pace exceeded all economists’ forecasts in a Bloomberg survey that had a median estimate of 700,000. The median selling price rose 5.6 % from a year earlier to $329,200 as inventory shrank.

Mortgage rates at historic lows -- along with more stable finances for upper-income Americans during the pandemic -- are bolstering demand and will help spark a pickup in residential construction activity that supports the economy’s recovery. Sales may nonetheless fall short of pre-pandemic levels as millions of jobs have been lost and many areas of the country experience a pickup in coronavirus cases.

“Housing is the strongest major sector of the economy,” Ian Shepherdson, chief economist at Pantheon Macroeconomics Ltd., wrote in a note. Falling mortgage rates are “more than offsetting the wave of Covid-induced job losses.”

“Expect homebuilders’ sentiment and housing construction activity to rebound further,” he added.

An S&P gauge of homebuilder shares pared losses, trading 0.3% lower at 10:44 a.m. in New York after losing as much as 1.9% earlier.

All of the four major U.S. regions showed higher home sales in June. Purchases jumped 18% in the West, and climbed 7.2% in the South. In the Northeast, the smallest of the four major regions, sale surged 89.7%.

The supply of new homes at the current sales pace fell to 4.7 months, an almost four-year low. The report also showed signs that builder backlogs are growing; the number of properties sold for which construction hadn’t yet started climbed to 233,000, the most since November 2017.

New homes account for about 10% of all purchases and are considered a more timely barometer than sales of previously owned properties which are calculated when contracts close. National Association of Realtors data this week showed sales of existing homes surged in June.

The government’s new-home sales data are volatile and have a wide margin of error. There’s a 90% chance that the monthly percentage change was between a 4% decline and a 31.6% increase, according to the U.S. Census Bureau. The report is published jointly by Census and the Department of Housing and Urban Development.

This article was provided by Bloomberg News.