While a report released by the Commerce Department on Friday showed a modest decrease in new home sales in the month of March, the annual rate of new home sales came in well above economist estimates due to an upward revision to February sales.

The report showed that new home sales fell 0.6 percent to an annual rate of 356,000 in March from a revised February rate of 358,000. Economists had expected new home sales to remain unchanged compared to the 337,000 originally reported for the previous month.

A steep drop in new home sales in the Northeast contributed to the modest monthly decrease, with sales in the region plunging 32.1 percent. While new home sales in the Midwest fell by 7.8 percent, sales in the South were unchanged and sales in the West rose 15.1 percent.

The Commerce Department also said that the median sales price of new houses sold in March was $201,400, while the average sales price was $258,000. The median price was down 12.2 percent compared to the same month a year ago, while the average price was down 10.3 percent.

Additionally, the report showed that the seasonally adjusted estimate of new houses for sale at the end of March was 311,000, down 5.2 percent from 328,000 in February. The supply of homes at the current sales rate slipped to 10.7 months from 11.2 months.

Peter Boockvar, equity strategist at Miller Tabak, said, While 10.7 is an improvement and a step in the right direction, 6 months is the 30-year average, so we still have a ways to go.

The National Association of Realtors released a separate report Thursday showing that existing home sales fell by more than expected in the month of March, although the trade group noted that first-time buyers are responding to low mortgage interest rates and tax credits.

The report showed that existing home sales fell 3.0 percent to an annual rate of 4.57 million units in March from a downwardly revised level of 4.71 million in February. With the monthly decrease, existing home sales were down 7.1 percent compared to the same month a year ago.

Economists had expected existing home sales to fall to a 4.65 million unit rate from the 4.72 million unit rate originally reported for the previous month.

While sales fell by more than expected, Lawrence Yun, NAR chief economist, suggested that the market appears to be stabilizing with modest monthly ups and downs. Yum added that first-time buyers are driving the market.

The share of lower priced home sales has trended up, indicating a return of many first-time buyers, Yun said. Sales in the upper price ranges remain stalled because of higher interest rates on jumbo loans.

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