Sales of new U.S. homes rose a much larger-than-expected 13.8 percent in March, the biggest one-month gain since April 1993, but prices fell sharply, a government report showed Wednesday.

The pace of new home sales rose to a seasonally adjusted 1.213 million unit annual rate from a downwardly revised 1.066 million unit rate in February, the Commerce Department said.

Analysts polled by Reuters were expecting home sales to rise to a 1.1 million unit pace in March.

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Despite gains, the new home sales report showed signs the housing market has slowed from peak levels. The median home price slipped 2.2 percent from a year earlier to $224,200, the first year-over-year decline since December 2003, the Commerce Department said.

Also, the March sales pace was down 7.2 percent from March 2005.

Even so, the strong new home sales pace comes after a trade association report Tuesday that showed existing home sales picked up by 0.3 percent in March, defying expectations for a slowdown, as buying rose in less-expensive markets and warm weather encouraged buyers.

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