Sales of new U.S. single-family homes increased more than expected in March as buyers rushed to take advantage of a decline in mortgage rates, but a gloomy economic outlook poses a challenge to the housing market recovery.

Many buyers, spooked by rising economic uncertainty, stayed away from the housing market during the start of the crucial spring season.

March sales of existing homes in the U.S. were down in March, but median home price exceeded $400,000 for the first time, National Association of Realtors data shows.