Sales of new homes in October jumped much higher than expected to a seasonally adjusted annual rate of 733,000.

That is an impressive 31 percent gain over last year and well above the 707,000 rate economists had forecast.

September’s annual sales were revised sharply higher from 701,000 to 738,000, the highest level in years. August and July were also revised up.

“Annual sales in 2019 should be the best year for new home sales since 2007,” Bill McBride said at Calculated Risk.

Mortgage rates climbed a bit in October but remain well-below last year’s levels. The rate cuts combined with very low unemployment and high levels of consumer confidence appear to be encouraging home buyers.

Sales of both new and existing homes have been on an upswing since summer. Residential construction added to overall economic growth in the July-September quarter after a long period of declines. Most economists expect this strength to continue.

New home sales are a small part of the overall housing market but punch above their weight class when it comes to economic impact because building homes is employment-intensive and new homes are typically outfitted with new appliances and furnishings.

–The Associated Press contributed to this report.