U.S. new-home sales during August went up 7.9 percent to a seasonally adjusted 421,000 units in August, the Department of Housing and Urban Development, and Census Bureau reported.

Offsetting the gains were slightly higher interest rates on home mortgages, the National Association of Home Builders said.

"Consumers are adjusting to the reality of today's higher rates following a period of record-setting lows, and today's sales report provides evidence of that," said Rick Judson, chairman of the NAHB and a home builder from Charlotte, N.C. "We expect to see more buyers coming back to the market as the psychological effects of the rate gains continue to wear off, particularly since, even after the recent spike, mortgage rates remain exceptionally favorable on a historic basis." 

NAHB Chief Economist David Crowe said the market still has a ways to go to be considered recovered.

 "Sales of new homes bounced partway back in August from an unusual low in July," Crowe said. "That said, we are only about halfway back to what would be considered a sustainable level of activity in a normal economy, and the ongoing housing recovery continues to be slowed by consumers' concerns about interest rates, as well as weak job growth and uncertainty about what's happening in Washington."