Updated from 10:17 a.m. EDT
New-home sales for March rose 2.6% from the prior month but still were weaker than expected, while inventories remained at heightened levels.
Sales of new houses totaled an annual rate of 858,000 units in March, compared with the downwardly revised February rate of 836,000, the Commerce Department said Wednesday.
Economists expected a rate of 885,000 unit sales, according to
. The sales rate tumbled 23.5% from a year earlier.
"The number is still paltry by any standards," says Phillip Neuhart, an economic analyst with Wachovia. "The spring selling season has been weak."
Inventory at the end of the month totaled 545,000 units, roughly flat with February. The inventory level represents a supply of 7.8 months at the current sales rate.
The median price of a new home was $254,000 in March, up from $238,800 a year earlier.
Sales surged 50% in the Northeast, and rose 9.8% in the Midwest. The Northeast, however, was coming off a very low base in February, so the month-over-month percentage rise is a bit misleading.
Meanwhile, the two largest sales regions -- the South and the West -- continued to show weakness from February to March. Sales fell 2.7% in the South and dropped 0.9% in the West.
Those looking for a relatively positive sign in the report can turn to the fact that completed homes for sale at the end of March totaled 178,000 units, down slightly from the 179,000 for sale in February. This is the first monthly drop in this category since May 2006.
"If that were to be the beginning of a trend, that would certainly be good news for builders," Neuhart says.
Homebuilder stocks were mostly lower after the report.
was down 34 cents, or 0.8%, to $42.90, while
slipped 11 cents, or 0.5%, to $22.42.
, which reports earnings after the market's close, fell 2 cents to $45.68.
, which also reports earnings after the close, was higher, rising 13 cents to $27.95.
The new-home sales report comes a day after the National Association of Realtors reported the
biggest drop in existing-home sales in 18 years. Existing-home sales are seen as a lagging indicator, since the data are based on home closings, whereas new-home sales account for when purchase contracts are signed.