U.S. new home sales surged 27 per cent last month, the Commerce Department announced Friday.

Sales of new homes in March reached a seasonally adjusted annual rate of 411,000, the strongest month since July and the biggest monthly increase in 47 years.

Government incentives helped boost U.S. new home sales in March. (Gerry Broome/Associated Press)

The results followed the previous month's record low number and blew past economists' expectations as better weather and government incentives boosted sales.

The government is offering an $8,000 credit for first-time buyers and $6,500 for current homeowners willing to buy and move into another property.

Economists surveyed by Thomson Reuters had expected a sales pace of 330,000. February's results were revised upward on Friday to 324,000, but remained an all-time low.

The average sale price was $214,000, up more than four per cent from a year earlier but down more than three per cent from February.

The statistics reinforced figures released Thursday by the National Association of Realtors that showed sales of previously occupied homes rose 6.8 per cent to a seasonally adjusted annual rate of 5.35 million in March, the highest level since December.

With files from The Associated Press