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New-home sales surged 6.1 percent in February – a seven-month high. NAFCU Research Assistant Yun Cohen said the increase was partially attributed to milder weather throughout the Midwest, which led to that region's 30.9 percent sales jump.

That is the strongest sales pace in the Midwest since November 2007. Overall, sales were 12.8 percent higher than a year ago.

"Nationally, inventory levels improved slightly while the median sales price eased somewhat," Cohen noted in a NAFCU Macro Data Flash report. "However, the market remains relatively tight with 5.4 months of supply, while rising mortgage rates continue to affect affordability."

Sales in February also rose in the West (+7.5 percent) and the South (+3.6 percent). The Northeast region saw a 21.4 percent decline during the month.

The median new-home price, non-seasonally adjusted, decreased from $308,200 in January to $296,200 in February, according to the Census Bureau. February's prices were down 4.9 percent from a year prior.

"Overall, improving rates of household formation and a strong labor market should support modest housing growth for the rest of 2017," Cohen added.