SEVEN-DAY transaction of new homes rose to the highest in Shanghai in three months as the market continued to regain its momentum amid ever-fading impact from earlier government tightening measures.

The area of new residential properties sold, excluding government-subsidized affordable housing, surged 20.7 percent from the previous week to 395,400 square meters, extending strength for the third consecutive week, Shanghai Homelink Real Estate Agency Co said in a report released today.

"The city's new housing market recovered notably with outlying districts of Jiading, Songjiang and Minhang registering the most robust sales," said Lu Qilin, a director of research at Homelink. "In contrast, new home supply fell for the second straight week, partly because some developers are holding back their plans to release as the city's red-hot land market is offering them high hopes for ever continuously-rising home prices."