New home sales in the United States rose in August, surprising economists, but downward revisions for June and July dim the picture.

U.S. new home sales rose 0.6% to 898,000 in August, the third straight monthly gain. However, sales for the two prior months were revised substantially lower. July’s sales were revised from down 950,000, while June’s were revised down from 906,000. “Sales were thus not as robust as previously thought, although still solid,” says BMO Nesbitt Burns.

BMO says that the slower pace of housing starts, together with the revisions to sales of new homes, suggest that the U.S. housing market was beginning to cool by the late summer.

“The deterioration in the labor market since the terrorist attacks, and the slowing economy are likely to lead to a further retreat. Although the housing market had remained fairly solid through the summer, cracks were beginning to show. The terrorist attacks will only magnify the cool breeze blowing through the market in the months ahead as economic growth decelerates,” it says.