[ForexNews]

New home sales totaled 356k in March, well above market consensus (337k) expectations. There were upward revisions to sales in the past few months, and new home inventories continue to fall rapidly. Analysts expect new home sales to bottom in 2Q09; today's report raises the possibility that this may have already happened in 1Q09, though we would not jump to this conclusion yet.

In addition to the upward surprise in March, new home sales in February (358k from 337k) and January (331k from 322k) were revised higher. In March, sales picked up in the South and West, but declined in the Northeast and Midwest. The months' supply of new homes for sale fell to 10.7 in March, down from 11.2 in February and the peak of 12.5 in January. The level of new home inventories is already falling at the fastest pace in the 45-year history of the series because of sharp cuts by builders, so the months' supply will continue to fall steadily if new home sales stabilize.