WASHINGTON, (Reuters) – Sales of single-family houses in the United States rose in October. However, the pace of sales for the previous month was sharply reduced due to higher prices for first-time buyers.

According to the Commerce Department, new home sales increased by 0.4% last month to a seasonally adjusted annual pace of 745,000 unit per month. From 800,000. units reported earlier, September’s sales pace is now 742,000 units.

The densely populated South saw sales rise, along with the Midwest and West, while they fell in the Northeast and West.

Reuters polled economic experts and forecast that home sales would remain stable at 800,000. The October year-on-year sales decline was 23.1% The peak was at 993,000 units per month in January. This is the highest level since 2006.

Sales rose last summer due to a mass exodus of people from urban areas to suburban locations. Americans were looking for more comfortable housing in order that they could have their own offices or take part in online learning during the pandemic. The pandemic tailwind has waned as vaccinations allow workers to return home and allow schools to reopen to in-person learning.

Despite this, the demand for homes is still strong due to a severe shortage of houses that have been previously sold.

From a year earlier, the median house price rose 17.5% in October and reached $407,000. 389,000 new houses are on the market, compared to 378,000 in September. The inventory was 62.2% comprised of houses under construction, while the remaining 28% were homes still to be constructed. The lack of material and labour is constraining builders.

Last week, the government announced that October’s backlog in construction of new houses was its largest since 1995.

It would take 6.3 months for the inventory of homes to be sold at October’s pace, an increase from September’s 6.1 month.