Sales of new homes recorded an unexpected rise in September as median home prices dropped to the lowest level in four years, the Commerce Department reported Monday.  

Sales of new single-family homes rose by 2.7 percent last month to a seasonally adjusted annual rate of 464,000 homes, Commerce said.

The median selling price for a new home was $218,400 in September down from $221,900 in August while the mean selling price rose to $275,500 from $263,900.

On an annual basis, the decline in median selling price was 9.1 percent compared to last year.

The September sales figure is still 33.1 percent below the level in September 2007 as the country is under pressure of a possible recession. The reading was still the worst in September for new home sales since 1981

Last week, the existing homes sales increase 5.5% from August. This rise in sales of new and existing homes could have brought hope to the industry that the worst housing slump would hit its bottom soon. But even with the increases, experts believe that the sales increases do not signal a bottom for the housing market. Many experts believed that the country has already entered a recession and that many will lose jobs making it more difficult for the country to move forward towards recovery.

New home sales dropped 21.4 percent in the Northeast. In the Midwest, the drop was 5.8 percent. However, sales jumped 22.7 percent in the West, a region of the country which has seen some of the biggest declines in prices, a development which has spurred sales. Sales were up 0.7 percent in the South.

The rise in sales left a total of 394,000 unsold new homes on the market at the end of September. Builders have been sharply cutting back on production, trying to get inventories more in line with sales.

Even with the latest drop in total unsold new homes, the inventory represents a 10.4 months supply at the September sales pace, still a historically high level.

The inventory of unsold existing homes is also remaining near historic highs as the market is marred with a record wave of home foreclosures.