WASHINGTON - Sales of new homes, helped by better weather, posted a modest increase in March, the government reported yesterday. But the gain was less than expected, and did not dispel concerns about continuing troubles in the housing industry.

In other evidence of housing's troubles, the Federal Reserve said yesterday that home sales continued to weaken in much of the country through mid-April. The Fed gave the assessment in its Beige Book report on regional economic conditions. Many Fed districts reported continued declines in home construction as builders tried to reduce record levels of unsold homes.

Most parts of the country logged moderate economic growth in the early spring despite sluggish manufacturing largely due to the housing slump. The Fed found that "manufacturing activity was slow" in many areas and that "residential real estate activity continued to weaken, with sales declining in many districts and flat in a number of others."

On the inflation front, the Fed survey found that "consumer prices remained generally stable, with some districts experiencing only modest price increases."

Still, businesses had to cope with higher prices for fuel and raw materials such as metals, said the Beige Book, which was named for the color of its cover.

In Philadelphia, overall economic conditions improved marginally, the Fed said.

In the first report, the Commerce Department said sales of new single-family homes rose to a seasonally adjusted annual rate of 858,000 units in March, up 2.6 percent from February, which had been the slowest sales pace in nearly seven years.

Sales posted the biggest increase in the Northeast - 50 percent - followed by 9.8 percent in the Midwest. Sales fell 2.7 percent in the South, and were down 0.9 percent in the West.

Nationally, the March improvement was half what analysts had forecast, and left the sales pace 23.5 percent lower than a year ago as the housing industry continues a painful adjustment after a boom period in which sales of new and older homes set records for five straight years.

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

The median price of a new home sold in March rose to $254,000, a 6.4 percent increase over a year ago. But analysts said the figure was skewed because the biggest jump in sales occurred in the Northeast, where home prices are generally higher than elsewhere.

In other economic news yesterday, the Commerce Department said orders to U.S. factories for big-ticket manufactured goods rose 3.4 percent in March, the fastest clip in three months. Much of the strength came from a 37.6 percent surge in demand for commercial aircraft.

The Philadelphia View

Highlights from yesterday's Federal Reserve report on the region's economy in March and early April.

Overall conditions improved marginally, with activity expected to expand at a modest pace.

Manufacturers reported a slight rise in product shipments, but new orders were flat. About 40 percent expect shipments and orders to increase in the next six months.

Retailers reported sales increases from March 2006, helped by an early Easter this year. Some warned that consumers are growing more cautious. Auto sales improved somewhat but remain below year-ago levels.

Demand for residential mortgages was flat, but commercial and industrial lending edged up. Businesses and consumers appear to be delaying or cutting plans to boost borrowing.

Price hikes for raw materials were more widespread than in February, especially for metals, plastics, industrial equipment, paper products and energy. Wages show a steady trend of moderate increases.

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