Sales of new single-family houses in February 2009 rose 4.7% to an annual rate of 337,000 but remain 41.1% below the pace of the same month a year ago, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development of the Department of Commerce.

The news provided fresh evidence that sales activity in the housing market is picking up, if marginally, as interest rates fall and the government's new $8,000 tax credit for first-time home buyers kicks in. The rise, however, was pushed up by a downward revision in the January sales numbers, which were taken down to a 13.2% decrease from the 10.2% originally reported. Moreover, the Commerce Department data does not take cancellations into account.

The median sales price fell 2.8% from January and 18.1% from a year ago to $200,900. The average sales price was $251,000, up from $239,100 in January but down from $301,200 in February, 2008, a drop of more than 16%.

Inventory, estimated at 330,000, fell 10,000 from January and stood at a supply of 12.2 months at the current sales rate, down from 12.9 months in January. The median months-on-the-market for new single family homes increased to 9.8 in February from 9.4 in January.

The gains were led by sales increases in the South and West, which were up 9.7% and 6.6% respectively. However, both remain sharply below the sales rate last year, with sales in the South off 38.5% and the West of 54.2% from February 2008.

Sales in the Northeast were off 3.3% month to month and down 25.6% year over year; Midwest sales were down 9.1% from January and 35.1% from February, 2008.

Not seasonally adjusted or annualized, 27,000 new single-family homes were sold in February, up from 23,000 in January but well below the 48,000 sold in February, 2008.

Shares of home builders surged on the news, led by Hovanaian Enterprises (NYSE:HOV), which was up 24% at $1.89 in heavy midmorning trading, Standard Pacific (NYSE:SPF), which was up 25.5% to $1.13, and M/I Homes, which rose 22.8% to $9.37. The bulk of the builder group was up in the low-to-mid-teen percentage range, with industry leaders NVR, Toll Brothers and M.D.C. up in the mid-single-digit percent range. The two primary home builder exchange traded funds, ITB and XHB, were up 9.1% and 7.7% respectively shortly after 10:30 a.m. The rally, however, evaporated by midafternoon, and the builder group closed mixed, with Hovnanian, Beazer, M/I, Standard Pacific and Orleans holding on to high single- or low doubt-digit percentage gains, likely the effect of short covering, and the better-grade stocks either posting modest advances or remaining flat.