Americans stepped up their purchases of new homes in July to the fastest pace in nearly nine years, as low mortgage rates and a steady job market fuel a real estate surge.

The Commerce Department says new-home sales jumped 12.4 per cent last month to a seasonally adjusted rate of 654,000 units, the strongest level since October 2007. Demand has eclipsed the pace of construction. Just 4.3 months’ supply of new homes is on the market, down from 5.2 months a year…