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(WASHINGTON, DC) -- Good news for the housing industry today - even though the U.S. Commerce Dept. reports a fractional 0.6 percent drop in March new home sales compared to February.

The good news in the Commerce Dept.'s report is that the number of unsold new homes is going down - a sign, some analysts say, that the housing market is stabilizing, or trying to get back to normal.

The inventory of new homes in March shrank to 311,000 from 328,000 in February.  The 328,000 number means there are 10.7 months' worth of new homes for sale still on the market.  In February, there was 11.2 months' worth of unsold inventory.

The monthly change in inventories was 5.2 percent, the largest decline in more than 45 years, the Commerce Dept. confirms.

The year-on-year inventory drop of 33.7 percent was the largest on record. The March inventory decline also brought home sales to an annual rate of 356,000. 

The median sales price for a new home dropped to $201,400 from $208,700.  But the average price increased a little to $258,000 from $255,100.

Housing industry analysts typically are hedging their calls on whether the market is improving or waiting for another crisis.

Asha Bangalore, economist, Northern Trust, Chicago, thinks  "housing is probably forming a bottom" because of the inventory decrease.

Jim Awad, managing direcdtor, Zephyr Management, New York, says "the economy is starting to stabilize."

Kurt Karl, chief U.S. economist, Swiss RE, New York, calls the Commerce Dept.'s March new home sales numbers "a gradual improvement...It's not taking off like a rocket but it's not looking to be heading south, either."

However, Gary Thayer, senior economist, Wachovia Securities, St. Louis, MO, wants to see home sales "rise for several months before we have a convincing sign that housing has hit a bottom." 

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