Led by a 6% rise in single-family starts, nationwide housing production rose 2.8% above an upwardly revised February rate of 920,000 to a seasonally adjusted annual rate of 946,000 units in March, according to newly released figures from HUD and the U.S. Census Bureau.

"We see improving signs of new-home construction as we move into the spring buying season," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Del. "The strongest recovery is in the Northeast and Midwest, where builders were hampered by severe winter weather earlier in the year."

"Today's report is in line with our forecast of a gradual strengthening in the housing sector in 2014," said David Crowe, NAHB chief economist. "However, several uncertainties including tight credit conditions for home buyers and erratic job growth are making builders cautious about getting ahead of demand."

Single-family housing starts rose 6% to a seasonally adjusted annual rate of 635,000 units in March, while multifamily starts fell 6.1% to 292,000 units.

Regionally in March, combined single- and multifamily housing production rose strongly in the Northeast and Midwest with gains of 30.7% and 65.5% , respectively, but fell 9.1% and 4.5% in the South and West, respectively.  

Overall permit issuance fell 2.4% to 990,000 units in March. The Northeast and Midwest posted gains of 33.3% and 26%, respectively, while the West was unchanged and the South posted a 17.1% decline.