The Commerce Department said new home sales rose 1.7 percent to a seasonally adjusted annual rate of 1.028 million, the third fastest pace since the government began tracking the data in 1963. March sales were revised slightly to a 1.011 million rate from the previously reported 1.012 million pace.

In the Commerce report, the supply of new homes on the market fell to 3.9 months' worth from 4.1 months in March, That's the leanest supply since September 2002 when the figure was also 3.9 months.

Annual sales in the Midwest posted the largest gain, 13.4 percent, to a 186,000 rate, while sales in the West saw a 4.3 percent increase, to 267,000. The South, the largest market for new homes, eked out a 0.6 percent gain to a 487,000 annual sales pace. The Northeast, however, saw sales dip 17.8 percent, to an 88,000 annual rate.