Sales of new homes dipped slightly in February, but the rate at which Americans are snapping up homes remains robust, offering little proof that 10 months of rising mortgage rates has had much of a slowing effect on the housing market.

New home sales fell 0.5% in February to an annual rate of 919,000, compared with an upwardly revised 924,000 rate in January. Year over year, new home sales rose 2.9% in February, the

Commerce Department

reported Thursday.

The news came as a surprise to Wall Street economists, who had expected home sales to decline to 877,000, according to a survey by

Reuters

.

The rise in new home sales comes after the

National Association of Realtors

reported Monday that sales of existing homes rose 6.7% year over year to an annualized rate of 4.75 million units.

The strong rate at which Americans are buying homes came despite rising interest rates and higher home prices, which in theory should slow home sales by making it more expensive for home buyers to borrow.

But the housing market has been a strong beneficiary of the booming U.S. economy. With record low unemployment, rising stock markets creating wealth, and buoyant consumer confidence, record amounts of American consumers are buying homes.

From June 1999 to February, the

Federal Reserve

raised interest rates four times for a total of 1 percentage point in an attempt to slow economic activity. The Fed has since raised rates by an additional quarter percentage point. That has caused mortgage rates to rise. According to the

Federal Home Loan Mortgage Corp.

, the average rate for a 30-year mortgage was 8.33% in February, up from 8.21% in January and 6.81% in February 1999.

Meanwhile, prices of new homes also rose in February. The median sales price of a new home was $162,000, compared with $158,000 in January.

The rising cost of homes and the unflagging pace of sales are among several signs of economic strength feeding Fed concerns that rampant consumer demand is outstripping supply, and could lead to widespread inflationary pressure. Rising home values, like rising stock values, have created a so-called wealth effect that makes consumers more confident, and more likely to keep up a heavy pace of spending.

Regionally, new home sales declined 10.7% in the West, and 0.2% in the South, but rose 15.6% in the Midwest and 1.2% in the Northeast.