New single-family home sales surged in May to a two-year high and prices rose from a year ago amid tightening supply, further signs the housing market was gaining some momentum.

The Commerce Department said on Monday sales jumped 7.6 percent to a seasonally adjusted 369,000-unit annual rate, the highest since April 2010.

Economists polled by Reuters had forecast sales at a 346,000-unit rate last month from April’s 343,000-unit pace. March’s sales pace was revised up to 347,000 units from the previously reported 332,000 units.

Compared to May last year, new home sales were up 19.8 percent. The report was the latest evidence of a broadening recovery in the housing market even as the economy is weakening.

Data last week showed a jump in home building intentions in May and a fourth straight month of gains in the median price of a previously owned home.

Residential construction is expected to contribute to gross domestic product this year for the first time since 2005.

Still, new home sales are only a quarter of their peak of a 1.389 million-unit pace in July 2005 and the sector remains constrained by an oversupply of previously owned homes.

New home sales account for about 7.5 percent of the overall housing market.

The improving housing market picture was further enhanced by a 5.6 percent rise in the median price of a new home to $234,500 from May last year.

While the inventory of new homes on the market edged up 0.7 percent to 145,000 units last month, it remained near record lows.

At May’s sales pace it would take 4.7 months to clear the houses from the market, the lowest since October 2005 and down from 5.0 months in April.

New home sales last month were buoyed by a 36.7 percent jump in the Northeast to their highest level since July 2009, and a 12.7 percent rise in the South to a two-year high. Sales in the West fell 3.5 percent and were down 10.6 percent in the Midwest.