Economists polled by Reuters had forecast new home sales rising 5.7 percent in May to a pace of 600,000 units from the previously reported rate of 570,000 units.

New U.S. single-family home sales rose in May and the drop in sales in the previous month was not as steep as previously reported, suggesting the housing market has regained steam.

The Commerce Department said on Friday new home sales increased 2.9 percent to a seasonally adjusted rate of 610,000 units last month. April’s sales pace was revised up to 593,000 units.

Economists polled by Reuters had forecast new home sales, which make up about10 percent of all home sales, rising 5.4 percent to a pace of 597,000 units last month from the previously reported rate of 569,000 units.

Sales were up 8.9 percent on a year-on-year basis. May’s sales increase came after April’s sales were revised to show a smaller drop than previously reported.

The housing market has been bolstered by continued job growth. The unemployment rate fell to a 16-year low of 4.3 percent in May and mortgage rates are still favorable by historical standards.

However, an increase in the cost of building materials and shortages of lots and labor have crimped homebuilding. With demand outstripping supply, house prices remain elevated.

The median house price rose to $345,800 in May from $310,200 in the prior month.

Across the nation’s four regions, sales were mixed. They fell 25.7 percent in the Midwest and 10.8 percent in the Northeast, but rose 13.3 percent in theWest and 6.2 percent in the South.

The inventory of new homes on the market increased 1.5 percent to 268,000units last month.

At May’s sales rate, it would take 5.3 months to clear inventory, unchanged from April. A six-month supply is seen as a healthy balance between supply and demand.