WASHINGTON, June 25 - Sales of newly built, single-family homes rose 7.6 percent to a seasonally adjusted annual rate of 369,000 units in May, according to newly released data from HUD and the U.S. Census Bureau.

"The relatively strong increase in new-home sales this May is an indication that more potential home buyers are being drawn to the market by today's excellent mortgage rates as well as firming conditions in some local economies," said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. "In addition, more people are recognizing the benefits that new homes can provide beyond what's available in the existing housing stock in terms of energy efficiency, updated technology and other features."

"May's sales report is a welcome sign that the market has returned to a more solid growth path following lackluster reports in March and April, and is in keeping with our expectations for continued, steady improvement through the end of this year," said NAHB Chief Economist David Crowe. "While the current sales rate remains low by historical standards and continues to be constrained by challenges related to credit availability for builders and faulty appraisals, the ongoing decline in the month's supply of new homes will necessitate additional construction in certain markets going forward."

Regionally, new-home sales were mixed in May. While the Northeast and South posted solid gains of 36.7 percent and 12.7 percent, respectively, the Midwest and West posted respective declines of 10.6 percent and 3.5 percent.

The inventory of new homes for sale was almost unchanged at a low level of 145,000 units in May, reflecting a historically slim, 4.7-month supply at the current sales pace.