New single-family home sales rose 5.7% from August to September, with 389,000 homes sold last month, according to the U.S. Census Bureau.
That is up from 368,000 sales in August and 27.1% above year ago levels when only 306,000 units were sold.
The median sales price of a home in September hit $242,400 while the average price hovered at $292,400.
"September’s rise in new home sales is another sign that homebuyers are becoming more willing and more able to splash out on a new home," research firm Capital Economics said in response to the report.
The number of new homes for sale at the end of September reached 145,000, which reflects a 4.5-month supply of homes at today's sales pace.
Econoday called the jump in home sales the best annual rate increase since mid-2010 when the market was still benefitting from homebuyer tax credits.
"September's gain is convincing and is led, with a 16.8% jump, by the South which is far larger than all other regions combined," Econoday said. "Supply, at 4.5 months for the lowest reading since 2005, is very tight and is limiting sales."