Sales of new homes leapt 13.9 percent in July compared to the prior month, demolishing expectations as the US housing market continues to heat up, according to government data released Tuesday.

The sales pace surged to an annual rate of 901,000 single-family homes sold, more than 36 percent above July 2019, the Commerce Department reported.

Sales have been helped by very low borrowing rates, but the results were uneven, with sales in the Midwest jumping an eye-popping 58.8 percent, while the Northeast posted a 23.1 percent drop.

Home builders are struggling to keep up with demand for new houses amid low mortgage rates, which is sending prices higher
Home builders are struggling to keep up with demand for new houses amid low mortgage rates, which is sending prices higher GETTY / JUSTIN SULLIVAN

It was the third consecutive month of massive increases, and follows the report last week that existing home sales surged 24.7 percent for a second straight record.

Strong demand is pushing home prices higher, and the average sales price rose to $391,300 from $381,900 in June, even as the median price dipped slightly.

Homebuilders are struggling to keep up with demand, and the supply of new homes on the market fell 13 percent last month, to the equivalent to just four months supply at the current sales pace, according to the report.