The supply of new homes for sale ticked lower from February, according to government figures.

A shortage of existing-home inventory is driving more people to the market for newly built homes. 

Homebuilders expressed “cautious optimism” that the lack of existing inventory would drive demand for new homes despite high construction costs and interest rates, the National Association of Home Builders reported.    

The median sales price of a new home declined on both a monthly and yearly basis, however, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported.        

The median sales price of a new home was down on a monthly basis but up on an annual one. 

The increase in builder confidence breaks a string of 12 straight monthly declines in the NAHB/Wells Fargo Housing Market Index. 

The move comes despite a slowdown in the single-family rental market. 

New-home permits fell 11.2% month over month, while housing completions jumped 10.8% in what one observer said could have “worrisome” long-term consequences for the nation’s housing supply. 

New-home sales rose 7.5% month over month, while the median price of a new house surged to $493,000 from $455,700 in September and $427,300 a year ago, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported.   

The pace of new single-family home sales, meanwhile, fell 6.1% from September to 598,000. 

The number of homes under construction rose during the month, as homebuilders continued to work through a large backlog of homes. 

Mortgage rates continued to weigh on homebuyers in September, following a brief uptick in new-home sales in August.  

New home construction missed analyst estimates in September, falling 8.1% month over month to an annual rate 1,439,000 homes, according to government statistics. 

Sales of new homes in the U.S. jumped 28.8% between July and August, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.  

New-home construction posted a 12.2% month-over-month increase in August, thanks in large part to a significant jump in multifamily building.  

The median price of a new home sold during the month was up 5.9%, however, according to figures from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.