Sales of new U.S. single-family homes surged 20.5% in August to a rate of 800,000 units, boosted by declining mortgage rates. Economists had forecast a lower rate of 650,000 units. New home sales were up 15.4% year-over-year, but the labor market has weakened, with nonfarm payrolls gains averaging only 29,000 jobs per month.

The Federal Reserve cut its benchmark interest rate to 4.00%-4.25%, leading to a drop in mortgage rates. The 30-year mortgage rate fell to an 11-month low of 6.26%, down from around 7.04% in mid-January. Despite the boost in home sales, the weakening labor market could limit the impact of lower mortgage rates.

Read more at Yahoo Finance: US new home sales surge in August