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.
New-home sales are still below the 700,000 pace considered healthy by most economists. But the pace has increased 18.5 percent from 352,000 a year ago.
Most economists see more gains ahead, as housing is likely to remain a consistent driver of economic growth this year.
"With increasing signs of a softer U.S. economy springing up in the spring, we can take comfort in the resilience of the housing recovery," said Jennifer Lee, senior economist at BMO Capital Markets.
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 both new and previously occupied homes has also helped boost prices.
The inventory of new homes for sale increased 2 percent in March to a 153,000, the second straight gain. Still, that's the equivalent of a 4.4 month supply at the current sales pace and historically lean, according to Jim O'Sullivan, chief U.S. economist at High Frequency Economics.
The median price of a new home rose to $247,000 in March. That's 3 percent higher than a year ago.
The March sales gain came from a 20.6 percent increase in the Northeast and a 19.4 percent rise in the South. Sales fell 20.9 percent in the West, where problems of supply have hampered home buying. Sales were down 12.1 percent in the Midwest.
Sales of previously occupied homes dipped in March from February, according to the National Association of Realtors. Still, sales were 10.3 percent higher than a year earlier.
The Realtors' group cited the low supply as a reason sales fell in March. But in a positive sign, the inventory of previously occupied homes increased for the second straight month. That suggests more sellers are confident that the recovery will continue and they can sell at a good price.
Low inventories 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.