WASHINGTON (Reuters) -Sales of new U.S. single-family homes surged in August, but the boost from declining mortgage rates could be limited by a weakening labor market.

New home sales shot up 20.5% to a seasonally adjusted annualized rate of 800,000 units last month, the Commerce Department’s Census Bureau said on Wednesday. The sales pace for July was revised higher to a rate of 664,000 units from the previously reported pace of 652,000 units.

Economists polled by Reuters had forecast new home sales, which make up about 14% of U.S. home sales, easing to a rate of 650,000 units. New home sales, which are counted at the signing of a contract, are volatile on a month-to-month basis and subject to big revisions.

They soared 15.4% on a year-over-year basis in August.

Mortgage rates declined

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