New U.S. single-family home sales surged to their highest level in 4-1/2 years in January and the month's supply of houses on the market was the smallest since March 2005, further evidence the housing sector recovery is gaining muscle.

The Commerce Department said on Tuesday sales jumped 15.6 percent to a seasonally adjusted 437,000-unit annual rate, the highest level since July 2008 when the economy was in the throes of a recession.

The percentage gain was the largest since April 1993. December's sales pace was revised up to 378,000 units from the previously reported 369,000 units. Economists polled by Reuters had expected sales to rise to a 381,000-unit rate last month.=