New single-family home sales dropped in March to their lowest level in four months, but the reading still beat analysts' expectations as the government said sales in prior months were higher than initially thought.

The Commerce Department said on Tuesday sales slipped 7.1 percent to a seasonally adjusted 328,000-unit annual rate.

Government data on new home sales can be subject to substantial revisions.

February's sales pace was revised higher to 353,000 units, the fastest pace since November 2009, from the previously reported 313,000 units.

Sales for December and January were also revised higher.

Economists polled by Reuters had forecast sales at a 320,000-unit rate in March.

The median price for a new home fell 1 percent to $234,500. However, compared to March last year, the median price was up 6.3 percent.

The U.S. housing sector has dragged on the economy since a home price bubble deflated and helped cause the 2007-2009 recession. Economists have speculated that an incipient recovery is taking hold in the sector but recent data has given mixed signals.

The National Association of Realtors said on Thursday that home resales fell in March but prices inched higher from a year earlier. Earlier on Tuesday, the S&P/Case Shiller index showed U.S. single-family home prices rose for the first time in 10 months in February.

The Commerce Department report showed the inventory of new homes on the market edged down to a record low in March at 144,000 units. At March's sales pace it would take 5.3 months to clear the houses from the market, up from 5.0 months in February.

(Reporting by Jason Lange; Editing by Neil Stempleman)

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