New figures show that sales of new US homes plunged to their lowest level in more than 16 years in March despite big price falls sparked by a glut of unsold homes.

The data came two days after an industry survey said sales of existing homes had slid further in March.

The Commerce Department reported that March new home sales fell 8.5% from February to a seasonally adjusted annual pace of 526,000 units. The March sales pace was the weakest since October 1991 and 36.6% down on the same month last year.

The median sales price of new houses sold in March was down 13.3% over the year at $227,600, the biggest annual drop since 1970.

Earlier, government figures showed that new orders for long-lasting US manufactured goods unexpectedly fell 0.3% in March after transportation slumped, but a key gauge of corporate investment appetite held steady.

The Commerce Department said new orders excluding transportation rose 1.5%, while transportation equipment fell 4.6%, including a matching drop in motor vehicles and parts which was the steepest drop since last August.

Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending, was unchanged as forecast and the previous month was revised up to show a 2% decline, from a 2.4% drop reported before.