The pace of new home sales in the US rose by 2.7 per cent last month – a much better figure than forecast by economists - as low prices fostered a flurry of activity in the stricken US housing market amid an intensifying financial crisis.

New home sales rose to an annualised rate of 464,000 units after dropping by a steep 12.3 per cent in August, the US commerce department said on Monday. The inventory of unsold homes also dropped, from 11.4 months’ supply in August to 10.4 months’ supply last month. The median sale price for a new home fell to $218,400, its lowest level in four years.

The data roughly trace encouraging figures on sales of previously owned homes, released last Friday, indicating that a bottoming in home sales might be taking hold and that could pave the way for an eventual rebound in the US housing market – the root of the global financial turmoil.

But economists have cautioned that the stabilisation of home sales reflected buying conditions in July and August, and could be threatened by the deeper economic woes in late September and October.

“There is a sense that home sales may have started September stronger but ended weaker and continued much softer in the current month,” said Alan Ruskin of RBS Global Banking & Markets in Greenwich, Connecticut.

A key monthly measure of US home prices – the Case-Shiller index – will be released on Tuesday, providing further direction about the fate of the US housing market.

On Friday, the National Association of Realtors said the pace of previously owned home sales rose to a rate of 5.18m annualised units last month – the highest level since the middle of last year. That was sharply higher than the 4.9m annualised unit rate expected by economists.

In addition, for the first time in three years the pace of existing home sales rose on an annual basis – by 1.4 per cent compared with September 2007. The median price for previously owned homes was $191,600 last month - the lowest level since April 2004 and a 9 per cent fall compared with September 2007.