Sales of new single-family homes rose in March, indicating the housing market recovery remains on track.

The Commerce Department said on Tuesday sales increased 1.5% to a seasonally adjusted annual rate of 417,000 units. Last month's rise followed a 7.6% drop in February.

Economists polled by Reuters had expected sales to rise to 420,000-unit rate last month.

Compared with March 2012, sales were up 18.5%, indicating the strength in the housing market that has helped boost the economy was on course. Sales are being set back by a lack of supply of homes on the market in some major parts of the country.

While the inventory of new homes on the market rose 2.0% to 153,000 units, it was not far from record lows.

At March's sales pace it would take 4.4 months to clear the houses on the market, the same pace in February.

A supply of six months is normally considered as a healthy balance between supply and demand. The low months' supply should push up new home prices.

The median sales price for a new home was $247,000, up 3.0% from a year ago.

Sales last month in the Northeast surged 20.6% and rose 19.4% in the South. Those gains were partially offset by declines in the West and Midwest.