In this Feb. 20, 2020, photo a framing crew builds a home in Raymond, N.H. On Wednesday, Feb. 26, the Commerce Department reports on sales of new homes in January. (AP Photo/Charles Krupa)

In this Feb. 20, 2020, photo a framing crew builds a home in Raymond, N.H. On Wednesday, Feb. 26, the Commerce Department reports on sales of new homes in January. (AP Photo/Charles Krupa)

WASHINGTON (AP) — U.S. sales of new homes jumped 7.9% in January to the fastest pace in more than 12 years, a positive sign for economic growth.

The Commerce Department said Wednesday that new homes sold at a seasonally adjusted annual rate of 764,000 last month. That’s the highest sales rate since July 2007, shortly before the U.S. economy slumped into the Great Recession.

Half of January’s sales gains came from people buying homes that have yet to be constructed, possible evidence that low mortgage rates may be driving their decisions to purchase. Borrowing costs for home loans have tumbled since 2018.

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But a shortage of properties on the market means that prices are also rising quickly. The median price of a new home surged 14% from a year ago to $348,200.