Despite a decline in March, the annual rate remains above what economists expect after an even stronger than originally reported February.

By Ben Rooney, CNNMoney.com staff writer Last Updated: April 24, 2009: 10:44 AM ET

NEW YORK (CNNMoney.com) -- Sales of newly constructed homes slipped in March, after an increase the month before that was even bigger than originally reported, according to a government report released Friday.

The Commerce Department said new home sales fell 0.6% last month to a seasonally adjusted annual rate of 356,000 from an upwardly revised 358,000 in February. Sales in February were originally reported at 337,000.

Economists were expecting a sales rate of 337,000, according to consensus estimates compiled by Briefing.com.

"This is clearly a better-than-expected number," said Michael Larson, a real estate analyst at Weiss Research. "Technically, yes, sales declined, but the last three months were revised higher and the raw number came in better than expectations."

The median sales price of new houses sold in March was $201,400, down nearly 18% from March 2008 when it was $245,300.

"All signs are pointing to stabilization in market conditions, which is due to lower prices," Larson said. "Clearly, we still have a problem with unemployment, and that's why any rebound we see will be muted."

The estimated number of new homes for sale at the end of last month was a seasonally adjusted 311,000. At the current sales pace, it would take 10.7 monthsto sell through that inventory, according to the report. That's down sharply from the previous month, when the estimated months of inventory was 12.2.

On Thursday, the National Association of Realtors said sales of existing homes fell 3% in March, after an unexpected rise the month before.