The numbers: U.S. new-home sales rose 7.2% to a seasonally adjusted rate of 670,000 in January, up from a revised 625,000 in the prior month, the Commerce Department reported Friday.

This is the fourth month in a row that new-home sales have grown—this despite the lull in the broader housing sector, with existing-home sales continuing their downward slide.

The January sales figure beat analyst estimates. Analysts polled by the Wall Street Journal had forecast new-home sales to come in at 620,000 in January.

Year over year, new-home sales are still down by 19.4%.

New-home sales rose a revised 7.2% to 625,000 in December, compared with the initial estimate of a 2.3% increase to 616,000.

Month-over-month data for new-home sales are volatile and are often revised.

Key details: The median sales price of a new home sold in January was $427,500.

The supply of new homes for sale fell by 9.2% between December and January, equating to an eight-month supply.

Regionally, the South led the U.S. in the number of new homes sold, with the figure surging by 17.1%.

Sales of new homes dropped across the rest of the country—most sharply in the Northeast, by 19.4%.

Big picture: As mortgage rates take off, home builders are offering incentives like mortgage-rate buydowns to entice buyers—and it’s working.

And with fewer existing homes coming on the market, buyers have more options to choose from if they look at new construction, which may be boosting sales.

Market reaction: The Dow Jones Industrial Average and the S&P 500 were down in early trading on Friday. The yield on the 10-year Treasury note rose above 3.93%.

The SPDR S&P Homebuilders ETF was down over 1%, and shares of builders, including D.R. Horton Inc., Lennar Corp., PulteGroup Inc. and Toll Brothers Inc., were all lower during morning trading.

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