WASHINGTON—U.S. home sales surged to an eight-month high September, but higher prices as supply remains tight are squeezing out first-time buyers from the housing market. Existing home sales increased by 7.0 percent—the largest increase in a year—to a seasonally adjusted annual rate of 6.29 million units last month, the highest level since January, the National Association of Realtors said on Thursday. Economists polled by Reuters had forecast sales rising to a rate of 6.09 million units. Sales rose in all four regions. Home resales, which account for the bulk of U.S. home sales, dropped 2.3 percent on a year-on-year basis. Demand for housing surged early in the coronavirus pandemic amid an exodus from cities to suburbs and other low-density locations as Americans sought more spacious accommodations for home offices and online schooling. The buying frenzy has abated as workers return to offices and schools reopened for in-person learning. Though house …