Observers believe the surprising strength of sales activity suggests the housing market continues to benefit from low interest rates. According to the report, sales of new homes rose a stronger-than-expected 5.8 percent to a seasonally adjusted 1.163 million annual pace in February, the fastest rate since the 1.190 million rate of August 2003.
However, January new home purchases were revised to 1.099 million units. That was down from the initially reported 1.106 million pace.
Analysts had expected February sales to come in at 1.098 million units. Compared to February 2003, new home sales were up 24.4 percent.
The supply of new homes vs. demand dipped in February. At a 3.8-month supply, the figure represented the leanest inventory of new homes on the market since September.
Sales were strongest in the West, up by 28.5 percent compared to January. In the Northeast they posted a 12 percent gain. Sales in the Midwest skidded 10.6 percent while purchases in the South were off by 1.2 percent for the month.