Good weather helped sales of new homes in the U.S. bounce back in March, ending two consecutive months of declines.

Sales rose a much better-than-expected 7.3% last month to an annualized rate of 1.01 million units. In addition, new home sales in February were revised up sharply to 943,000 a.r. units from 854,000. March was the sixth month in the past eight in which new home sales exceeded the one million-unit mark.

“There is little doubt the better weather was a key factor in the surge of new home sales last month,” BMO Nesbitt Burns Inc. chief economist Sherry Cooper said in a report Friday.

“Sales in the Northeast staged a vigourous bounce-back in March, soaring 82% from a snow-filled February. Sales improved for all regions apart from the Midwest. And, the median price of new homes rose 1.8% last month to $182,000.”

Meanwhile, sales of existing homes dropped 5.6% to an annualized level of 5.53 million units in March from an upwardly revised 5.86 million units (was 5.84 million) in the prior month. Sales fell in all regions.

“Even though mortgage rates have risen recently, they still remain near generational lows,” Cooper said. “The U.S. housing sector remains one of the gems in the U.S economy, providing a firm base for economic growth.”

However, she cautioned, a weak job market suggests that the sector will cool somewhat in the year ahead and probably will not be the growth driver it was in 2002.