NEW YORK (CNN/Money) - New home sales rose in the United States in August, the government said Thursday, pointing to continuing strength in the housing market, which has helped keep the broader economy from sinking too deep.

The Commerce Department said sales of new homes rose 1.9 percent to a 996,000-unit pace in August after rising a revised 1.9 percent to a 977,000-unit pace in July. Economists, on average, expected home sales to fall to 980,000, according to Briefing.com.

The median sales price for a new home sold in August was $175,300, up from $172,500 in July.

U.S. stock prices continued to rise in early trading after the news was announced. Treasury bond prices fell.

On Wednesday, the National Association of Realtors reported that sales of existing homes dropped 1.3 percent in August to an annual pace of 5.28 million, lower than economists' expectations but just slightly below July's record pace.

Plunging mortgage rates have fueled robust demand for houses in recent months. And the supply of available homes is low, helping boost home prices ever higher.

The result has been an improvement of homeowners' balance sheets, encouraging them to spend more and to refinance their home loans to take advantage of additional equity and lower their monthly payments, putting more cash in their pockets.

The housing market has been so robust, in fact, that some economists have worried that there's a speculative bubble in the market, and that the steady increase in home prices isn't supported by fundamentals.

Most economists, however, doubt a housing bubble exists on a national level, though extremes may exist in some local markets.