The U.S. solar industry saw solar photovoltaics (PV) installations stabilized in the first quarter this year, a leading industry report revealed on Tuesday.

The U.S. PV market installed 723 megawatts (MW) in the first quarter, representing an increase of 33 percent over the same period last year, according to a report released by the U.S. Solar Energy Industries Association (SEIA) and GTM Research.

It marked the best first quarter of any given year for the industry, but was dwarfed by the previous quarter's peak of 1,310 MW.

Notably, the new installations accounted for over 48 percent of all new electric capacity installed in the United States.

As of the first quarter, the total solar electricity capacity installed in the United States reached 8,500 MW, enough to power more than 1.3 million households, said Rhone Resch, president and CEO of SEIA.

With the federal investment tax credit (ITC) currently in place through the end of 2016 and PV system prices continuing to fall each quarter, the U.S. solar market's prospects have never been better, said the SEIA in the report.

The ITC allows the solar industry to take 30 percent tax credit from the development cost. The average residential PV system price fell to 4.93 dollars per watt in the first quarter from 5.86 dollars per watt a year ago, while the average non-residential system price fell to 3.92 dollars per watt from 4.64 dollars per watt, according to the report.

The SEIA predicted 4.4 gigawatts (GW) of PV will installed by the end of 2013, further growing to 9.2 GW annually in 2016. In particular, it held a bullish view on the residential market.

The residential PV sector installed 164 MW in the first quarter, up 53 percent over the first quarter last year and 11 percent over the previous quarter. Unlike the non-residential and utility markets, residential solar has not exhibited seasonality and market volatility on a national basis. Quarterly growth in the U.S. residential market has ranged from four percent to 21 percent in 12 of the past 13 quarters.

"Installations will speed up over the next four years as projects become economically preferable to retail power in more locations," said Shayle Kann, vice president of research at GTM.

Kann cautioned that changes to net metering and electricity rate structures could serve as the market's primary barrier to adoption. Endi