Sales of new homes in the U.S. increased by 13.8% in March, the biggest rise since April 1993.

Although purchases of new homes last month jumped to a seasonally adjusted annual rate of 1.213 million from 1.066 million in February, the figure is 7.2% below the March 2005 estimate of 1.307 million, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This news comes a day after a report showing sales of previously owned homes rose unexpectedly in March, which suggests an improved labour market in the U.S. is providing support to housing purchases while borrowing costs continue to increase.

The median sales price of new houses sold in March 2006 was US$224,200, dropping 2.2.% from the same month last year; the average sales price was US$279,100. The seasonally adjusted estimate of new houses for sale at the end of March was 555,000, representing a supply of 5.5 months at the current sales rate.

Economists consider new home sales, which are recorded when a contract is signed, as a leading indicator of the housing market.