March housing starts rose 7.2 percent to a seasonally adjusted annual rate of 549,000 units, the U.S. Commerce Department reported Tuesday.

Officials with the National Association of Home Builders said they were pleased with the good news, which they said has been hard to come by lately.

"While the overall rate of new-home production remains quite low and is still being weighed down by significant uncertainties among both home builders and buyers, this latest report is encouraging," said Bob Nielsen, NAHB chairman and a home builder from Reno, Nev. "It means that some builders are cautiously beginning to re-stock their extremely thin inventories of new homes in anticipation of gradual improvement in consumer demand as the economy slowly inches toward recovery."

NAHB chief economist David Crowe said the report was what he expected.

"The modest improvement in new-home production and permitting in March is in line with our forecasts for incremental gains through the spring buying season," Crowe said. "While our builder members continue to experience a great number of challenges with regard to competition from foreclosed and short-sale properties, low appraisal values and tight credit conditions, they have noted slight improvements in interest among qualified buyers, and they need to be ready to meet the demand as it materializes."