WASHINGTON (Reuters) - Sales of new U.S. single-family homes fell more than expected in April amid a resurgence in mortgage rates and higher prices, further evidence that the housing market was losing momentum in the second quarter.

New home sales dropped 4.7% to a seasonally adjusted annual rate of 634,000 units last month, the Commerce Department's Census Bureau said on Thursday. The sales pace for March was revised lower to 665,000 units from the previously reported 693,000 units.

Economists polled by Reuters had forecast new home sales, which account for more than 10% of U.S. home sales, would fall to a rate of 679,000 units. Sales plunged 20.9% in the Northeast and 7.3% in the West. They fell 4.8% in the densely populated South but increased 10.0% in the Midwest.

New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis.

Sales declined 7.7% on a year-on-year basis in April. Builders have been constructing smaller homes and giving incentives to buyers to offer some cushion from higher mortgage rates. That contributed to residential investment growing at its fastest pace in more than three years in the first quarter.

The average rate on the popular 30-year fixed-rate mortgage increased through April, pushing back above 7%, data from mortgage finance agency Freddie Mac showed.

The run-up in mortgage rates has sapped momentum from the housing market. The National Association of Realtors on Wednesday reported a drop in existing home sales in April, while government data last week showed single-family housing starts and building permits fell last month. Homebuilder confidence deteriorated considerably in May.

The median new house price increased 3.9% to $433,500 in April from a year ago. Most of the new homes sold last month were in the $300,000-$499,999 price range.

There were 480,000 new homes on the market at the end of April, up from 470,000 units in March. At April's sales pace it would take 9.1 months to clear the supply of houses on the market, up from 8.5 months in March.

(Editing by Paul Simao)