U.S. new home sales slipped 0.8 percent in June, a smaller decline than expected, as low mortgage interest rates sustained home buyer interest, a government report showed on Tuesday.

Sales of new homes dipped to a seasonally adjusted annual rate of 1.326 million units last month from a downwardly revised 1.337 million in May, the highest pace on record. Analysts polled by Reuters were expecting sales to slow to a 1.28 million clip.

Inventories of homes available for sale held steady at a 3.4 months' supply for the second straight month, matching their record low.

Sales of new homes rose 9.6 percent to a record high 696,000 rate in the South, the region where most new homes were sold. Sales fell 13.1 percent to 338,000 in the West, 2.9 percent to 201,000 in the Midwest, and 14.2 percent to 91,000 in the Northeast.

Sales of already-owned homes jumped to a record high last month, the National Association of Realtors (search) reported on Monday, as home buyers rushed to buy before anticipated interest rate rises due to a strengthening economy.

Mortgage interest rates have hovered not far above historical lows since the beginning of the year. After rising in the spring, the national average for the popular 30-year fixed rate mortgage (search) fell to 5.98 percent last week, mortgage finance provider Freddie Mac (FRE) said.