WASHINGTON -- U.S. sales of new homes rebounded in March to a seasonally adjusted annual rate of 417,000. The increase added to evidence of a sustained housing recovery at the start of the spring buying season.
The Commerce Department said Tuesday that sales of new homes increased 1.5 percent. The gain brought the level higher than February's pace of 411,000, though below January's 445,000 -- the fastest pace since July 2008.
The median price of a new home rose to $247,000 in March. That's 3 percent higher than a year ago.
New-home sales are still below the 700,000 pace considered healthy by most economists. But the pace has increased 18.5 percent from a year ago. And most economists see more gains ahead.
Steady job creation and near-record-low mortgage rates are spurring more Americans to buy houses. The rise in demand is helping to boost sales and prices in most markets. Higher prices tend to make homeowners feel wealthier and encourage more spending.
A limited supply of available homes has held back home sales of previously occupied homes. Those sales dipped in March from February, according to the National Association of Realtors.
But sales of previously occupied homes were 10.3 percent higher in March than a year earlier. And the supply of homes increased for the second straight month after eight months of declines. That increase suggests more sellers are confident that the recovery will continue and they can sell at a good price.
Low inventories of existing homes have helped drive more construction of new homes.
U.S. homebuilders started work on more than 1 million new houses and apartments in March at a seasonally adjusted annual rate, the first time it had crossed that threshold in nearly five years. That reflected a surge in volatile apartment building.
Single-family home construction fell in March after reaching the fastest in nearly five years.
Still, a low supply of homes for sale is just one of several constraints that could limit sales. Since the housing bubble burst more than six years ago, banks have imposed tighter credit conditions and required larger down payments.
That has made it harder for first-time homebuyers to qualify for the super-low mortgage rates that have resulted from the Federal Reserve's efforts to ease credit.