Home buyers kept builders busy in March, beating economists’ projections to produce a 26.9% rise in new home sales, according to data released Friday by the U.S. Census Bureau.

That translates into a seasonally adjusted annual sales level of 411,000 for March, which is 23.8% above the same month one year ago. Given such activity, new-home inventory dropped to just 228,000 units, which is just 6.7 months of supply and represents the smallest number of new homes for sale since 1971.

Prices did fall in March, slipping 3.4% to a median value of $214,000 for a new home. (For comparison, the median price of an existing home in March was $170,700, according to National Association of Realtors data released this week.)

Industry watchers disagreed about the significance of today’s statistics.

Some suggested this jump in new-home sales is the last hurrah before a difficult late spring and summer for builders, as home prices dip again and the economy still tries to find its footing.  “Going forward, we are likely to see sales decline in either April or May, a payback for the second homeowners' tax credit. Afterward, sales should improve because of job growth and inventory re-stocking,” predicted Patrick Newport, U.S. economist for market-research firm IHS Global Insight in Lexington, Mass.

Others saw today’s numbers as a sign of a stabilizing housing market.

“While we believe the strong rebound was certainly helped materially by the upcoming expiration of the tax credit, at the same time, we believe the last two months were also depressed due to an earlier pulling forward of demand when the tax credit was initially scheduled to expire at the end of November,” said Michael Rehaut, an analyst with J.P. Morgan. “We also note the April NAHB survey [reading] of 19, which rose strongly from March’s 15, as a sign that fundamentals are improving. As a result, we expect the builders to continue to show positive order growth during the spring selling season, as well as order growth in the second half of the year, as community counts stabilize and the builders gain share against a more stable housing backdrop.”

David I. Goldberg, an analyst with UBS Investment Bank in New York, urged caution. “Although this is being viewed with an outpouring of optimism, we would suggest caution, as the pickup in sales is largely related to inclement weather in January/February and the approaching expiration of the tax credit,” he said. “We note that sales volumes today are similar to levels witnessed when the original tax credit was enacted.”

Alison Rice is senior editor, online, at BUILDER magazine.