Sales of new houses in the United States unexpectedly rose in September from a 17-year low, propelled by a drop in prices ahead of the latest turmoil in financial markets.

Purchases increased 2.7%, to an annual rate of 464,000, from 452,000 the prior month that was less than previously estimated, the Commerce Department said Monday.

The median sale price fell to a four-year low.

"Builders are seeing the light," said Mark Zandi, the chief economist at Moody's Economy.com in West Chester, Pa.

"They are cutting prices more aggressively. They're very nervous about all the foreclosures."

Economists had forecast new-home sales would drop to a 450,000 annual pace from an originally reported 460,000 rate the prior month, according to the median estimate in a Bloomberg survey of 59 economists. Forecasts ranged from 400,000 to 501,000.

The median price of a new home decreased 9.1% from a year earlier, to $218,400, the lowest since September 2004.

Sales were down 33% from September 2007, the Commerce report showed.

On a positive note, builders cut inventories at a record pace.

The number of homes for sale fell to a seasonally adjusted 394,000, the fewest since June 2004. The 7.3% decline from August was the biggest since record keeping began in 1963.

The supply of homes at the current sales rate fell to 10.4 months' worth from 11.4 months. A supply of five to six months is often cited as signaling a stable market.

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