NEW YORK (CNN/Money) - The pace of new home sales posted an unexpected gain in September, according to a government report Wednesday that came in stronger than Wall Street forecasts.

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The Census Bureau report showed new homes sold at an annual pace of 1,206,000 in the month, up from a revised 1,165,000 pace in August.

Economists surveyed by Briefing.com forecast that sales would slow to an annual rate of 1.15 million in September.

The Census Bureau report showed gains in all regions of the country except the West, which had a 0.8 percent decline in the sales pace. The median sales price was $197,700 in September, down about 3 percent from $215,900 in August but up about 3 percent from a median price of $192,000 in September 2003.

Continued low mortgage interest rates through September helped support the sales. The Freddie Mac survey of mortgage rates has shown rates falling steadily since May. And since rates are down even more in October than they were in September, there could be more strong sales reports ahead.

This is the second report this week to show unexpected strength in the housing market. The National Association of Realtors report Monday on existing home sales in September showed an expected gain as well.

The new home sales report is based on sales contracts, while existing home sales data reports home closings, which generally take place a month or two later in the process. So new home sales, while a smaller part of the market, are considered more current data about the state of the housing market.