(Bloomberg) -- US new-home sales advanced in May to the fastest pace in over a year, bolstered by limited inventory in the resale market.

Purchases of new single-family homes increased 12.2% to an annualized 763,000 pace last month, government data showed Tuesday. The figure marked the third-straight monthly advance and beat all but one estimate in a Bloomberg survey of economists.

While new homes make up a much smaller share of overall housing stock than older construction, owners’ reluctance to list their homes in a high interest-rate environment has altered the makeup of home purchases. 

Builders are rushing to create more inventory to satisfy pent-up demand, driving a surge of groundbreakings and helping new-home sales reach levels above those seen before the pandemic.

The number of homes sold in May and awaiting the start of construction — a measure of backlogs — rose for a third month to the highest since January 2022.

Inventory Levels

There were 428,000 homes for sale as of the end of last month, roughly in line with prior readings this year. That represents 6.7 months of supply at the current sales rate, the lowest since February 2022.

High mortgage rates remain a key affordability concern, though there are indications that the housing sector has not only bottomed, but could also begin contributing to economic growth.

Read more: Homebuilding Set to Boost US Economy After Two-Year Contraction

The median sales price of a new home was down 7.6% from a year earlier to $416,300. That marked a second-straight month of annual declines.

Sales advanced in all four regions, and purchases in the South were the highest since the end of 2021.

Sales of new homes are considered a timelier barometer than purchases of previously-owned homes, which are calculated when contracts close. Those sales remained weak in May, separate data showed last week. 

The new-homes data are volatile; the report showed 90% confidence that the change in sales ranged from a 0.6% decline to a 25% gain.

A separate report Tuesday showed consumer confidence rose in June to the highest level since early 2022.