THE home buying momentum continued to recover in Shanghai last week amid an increased supply.

The city saw the sales of new homes, excluding government-funded affordable housing, rise 27 percent from a week earlier to 83,400 square meters, extending gains for the third straight week, a report by Shanghai Deovolente Realty Co said yesterday.

Meanwhile, the supply of new homes surged 207 percent week on week to 117,600 square meters, the highest release recorded this year, Deovolente data showed.

"While home sales climbed steadily over the past few weeks, the overall sentiment was still very sluggish as they remained below the 100,000-square-meter weekly barrier," said Lu Qilin, a researcher with Deovolente. "Most of the best-selling projects last week are located in outlying areas and costing no more than 2 million yuan (US$317,965)."

The average price of new homes stood at 20,666 yuan per square meter last week, up 0.98 percent from the previous seven-day period. Some 3,900 square meters of luxury houses, costing more than 50,000 yuan a square meter, were sold in the city, a weekly jump of 39 percent.

As of Sunday, new home sales had reached 168,000 square meters in the city this month, a decline of 11 percent from the same period of January, according to data released by Century 21 China Real Estate.

"The upcoming cut in banks' reserve requirement ratio serves as the latest signal from the government for a mild easing in monetary policies and could be regarded as good news for the housing market," said Huang Hetao, a research manager with Century 21.