According to new data from the federal government, new home sales rose to the highest level in seven years in February. Sales of newly built, single-family homes increased 7.8% from a month earlier to a seasonally adjusted annual rate of 539,000, the report said. That is the highest level since February 2008.

Metrostudy's weekly data on traffic and sales have been showing that "traffic," or the number of people going through builders' showrooms has been up in February, and also so far in March, compared with the same period last year. In fact, traffic is stronger in many markets than in the same period for the past two years.

More importantly, some markets, like Salt Lake City, have seen better "conversions," which is the percentage of this traffic that actually buys a new home. This helps builders achieve better sales numbers for any given level of traffic.

Watch for further (gradual) improvement throughout the year as demand for new homes rises, not only in the move-up market, but also in the retiree market.

For the full report, see the new release from the US Census Bureau.