INSTANT VIEW: U.S. new home sales down 0.6 percent in March

NEW YORK (Reuters) - Sales of newly built U.S. single-family homes dropped 0.6 percent in March, but the stock of homes for sale at the end of the month still plummeted at a record pace, Commerce Department data showed on Friday.

KEY POINTS: * The inventory of new homes shrank in March, to 311,000 from 328,000 in February. * That left the supply of homes available for sale at 10.7 months' worth, compared to February's 11.2 months. * The Commerce Department said that the monthly change in inventories, of 5.2 percent, was the largest drop in more than 45 years and the year-on-year plunge of 33.7 percent was the largest on record. * February sales were much stronger than originally thought, with the report showing they rose 8.2 percent, compared to the 4.7 percent gain previously reported. * The March drop brought home sales to a 356,000 annual pace. * Analysts polled by Reuters had forecast sales at 340,000. * The median sales price for a new home fell to $201,400 from $208,700 in February. The average price, however, rose slightly to $258,000 from $255,100.

COMMENTS:

ASHA BANGALORE, ECONOMIST, NORTHERN TRUST, CHICAGO:

"Housing is probably forming a bottom cause even the supply of homes, the inventories, declined. I think the housing market is stabilizing."

JIM AWAD, MANAGING DIRECTOR, ZEPHYR MANAGEMENT, NEW YORK:

"The numbers add credibility to the argument that the economy is starting to stabilize. That's been the cause of the stock market rally, so this is an additional sign that the worst of the recession is behind us, though these numbers are very volatile.

"Any news on the auto companies, or leaks about the banks and the stress test will be the big news today, but this is one more quarter in the pocket of the bulls."

KURT KARL, CHIEF U.S. ECONOMIST, SWISS RE, NEW YORK:

"What we are seeing on a moving average basis is a gradual improvement from very low numbers in new home sales. It's not taking off like a rocket but it's not looking to be heading south either. Affordability is at record high, and mortgage rates are at record low."

GARY THAYER, SENIOR ECONOMIST, WACHOVIA SECURITIES, ST. LOUIS, MISSOURI:

"It's encouraging to see some upward revision to last month's number, but we didn't have any follow through to that in the latest month. Instead we had a pullback, though a small one. It's potentially a sign of stabilization, but we need to see home sales rise for several months before we have a convincing sign that housing has hit a bottom. Homebuilders appear to be holding the line on new construction which should help the inventory situation and would set the stage for an upturn in construction if sales start to improve. I think we're close to a bottom and maybe in a couple of months we'll have some convincing evidence of that, but not yet."

GREG SALVAGGIO, SENIOR VICE PRESIDENT, CAPITAL MARKETS, TEMPUS CONSULTING, WASHINGTON:

"It won't have much of an affect today. What is driving the dollar weakness overnight particularly against the euro and to a lesser extent against the yen is the release this afternoon of the parameters of the stress test. There is significant concern out there that more than one of the larger U.S. financial institutions will be deemed failures based upon this test. This is driving investor anxiety about holding the dollar."

MARKET REACTION: STOCKS: U.S. equity indexes extend gains after new home sales data. BONDS: U.S. Treasury debt prices fall. DOLLAR: U.S. dollar little changed versus yen, euro.

DATA RELEASED EARLIER APRIL 24:

U.S. March durable goods orders ease 0.8 percent