Sales of new homes rose in April for the first time in six months although the unexpected increase still left activity near the lowest level in 17 years.
The Commerce Department reported Tuesday that sales of new homes rose 3.3 percent in April to a seasonally adjusted annual rate of 526,000 units.
But the government revised March activity lower to show an even bigger drop of 11 percent to an annual rate of 509,000, which was the weakest pace for sales since April 1991.
Economists believe that new home sales will remain weak for some time as the housing industry struggles with falling prices and rising mortgage foreclosures, which are dumping even more homes on an already glutted market.
The Commerce report showed that the median price of a new home sold in April dropped to $246,100 in April, down 4.2 percent from April 2007.
A separate report showed home prices falling during the first three months of this year at the sharpest rate in two decades.
The Standard & Poor's/Case-Shiller index fell 14.1 percent in the first quarter compared with a year earlier, the biggest year-over-year decline since the index began in 1988.
The Commerce report on new home sales showed the April rebound was led by a huge 41.7 percent surge in sales in the Northeast.
Sales were up 8.3 percent in the West and 5.8 percent in the Midwest.
The only region which saw a decline in sales in April was the South, where sales fell by 2.4 percent.
Meanwhile, prices of U.S. single-family homes plunged a record 14.1 percent in the first quarter from a year earlier, marking a pace five times faster than the last housing recession, according to the Standard & Poor's/Case Shiller national home price index reported on Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan areas fell 2.2 percent in March from February and plummeted 14.4 percent from March 2007.
Economists expected prices for the 20-city index to fall 2.0 percent on month and 14.0 percent from a year earlier, according to a median in a Reuters survey.
"There are very few silver linings that one can see in the data," David Blitzer, chairman of S&P's index committee, said in a statement.
Falling home prices have become the scourge of the housing market that is seeing its worst downturn since the 1930s. Home values since last year have been dropping below balances owed on many mortgages, leaving borrowers with no equity and more likely to succumb to foreclosure.
The crisis in foreclosures, which pressure prices even lower, has spurred numerous plans by regulators and lawmakers that aim to keep borrowers in their homes by forgiving a portion of their loan's principle.
Housing markets that grew the most during the housing boom, such as Las Vegas, Nevada and Miami, Florida, are leading the decline, S&P said.
S&P said its composite index of 10 metropolitan areas declined 2.4 percent in March, for a record 15.3 percent year-over-year drop.
--AP and Reuters contributed to this report.