Sales of new homes declined in February for a third straight month, the government reported, as the housing sector showed signs of leveling off from last year's record pace. Sales fell 2% to a seasonally adjusted annual rate of 881,000 last month, following a revised 6.7% drop to 899,000 in January and a 2.1% fall in December. New-home sales hit a record annualized rate of 985,000 in November before starting to decline over the subsequent three months. That boosted the supply of homes on the market to 301,000 at the end of February from 297,000 in January. The only region where new-home sales increased last month was the Midwest, where they jumped 22.9% to an annualized 177,000. By contrast, new-home sales in the West fell 8.7% to 231,000, annualized, and dipped 7.4% in the South to 386,000. Sales in the Northeast were unchanged from January at 86,000 a year. New-home prices climbed strongly in February, hitting a record average of $187,200.