Sales of new homes rebounded slightly in March, helped by better weather, but the gain was not enough to offset big declines in the previous two months.

The Commerce Department reported Wednesday that new home sales rose 2.6 percent in March compared with February, when new home sales had plunged to the lowest level in nearly seven years. New homes were sold at a seasonally adjusted annual rate of 858,000 units in March.

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The March improvement was just half what analysts had expected and still left the sales pace 23.5 percent lower than a year ago as the housing industry continues to go through a painful adjustment after an extended boom period.

The report on new home sales followed a report Tuesday that sales of existing homes, by far the larger part of the sales market, had fallen 8.4 percent in March, the biggest decline in 18 years.

The slump in housing, which began last year, has been a significant drag on economic growth. Analysts expect that to continue as rising mortgage foreclosures dump more homes onto the market and cause lenders to toughen their standards, making it harder for prospective buyers to qualify for loans.

In other economic news, the Commerce Department said Wednesday that orders to U.S. factories for big-ticket manufactured goods rose 3.4 percent in March, the fastest clip in three months, helped by the biggest jump in orders by businesses to expand and modernize in 2 1/2 years.

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