Sales of new homes in the US hit a three-month high in January, rising faster than expected as buyers took advantage of low mortgage rates to buy homes. Now the interest rate is starting to rise.

Government data released on Wednesday showed that sales of new single-family homes rose 4.3 per cent in January, or an annualised rate of 923000, from an upward revision to 885000 in December. The median estimate is 856000 sets.

The median price rose 5.3 per cent year-on-year to $346400, the highest in January.

The backlog of orders from builders remains high, suggesting that residential construction will remain strong in the coming months as a force driving economic growth.

Applications for home loans fell to a nine-month low last week against a backdrop of rising mortgage rates and soaring house prices, according to a report released by the Mortgage Bankers Association (MBA) earlier Wednesday. In addition, the index, which measures house prices in 20 cities, recorded its biggest year-on-year increase since 2014 in December.