Sales of new U.S. homes rose more than expected in May, according to the Commerce Department, a hopeful sign that the housing market is still on a recovery track.

Total new home sales grew 7.6 percent last month, to a seasonally adjusted annual level of 369,000 homes. That is a high not seen since April 2010, and even then sales were artificially inflated by the homebuyer tax credit. Economists had roughly predicted that sales would reach a pace of 346,000 in May, well below the actual sales. And compared with the previous year, new home sales were up 19.8 percent.

The median price of new homes also increased in May, rising 5.6 percent from a year ago to $234,500. Inventory inched up 0.7 percent to 145,000 homes on the market, representing a 4.7-month supply at the current sales pace.

“The housing market recovery remains on track. While we still have a long ways to go, healing is taking place and we are starting to see improvement,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina as quoted in a Reuters article.

Yet this increase in new home sales may not truly be a sign of recovery just yet. It is possible that sale of new homes increased as the supply of lower-priced existing homes has dwindled in many areas. The National Association of Realtors reported last week that inventory of existing homes fell to 2.49 million homes in May. At the current sales rate that is only a 6.6-month supply, down noticeably from one year earlier when there was a 9.1-month supply.

And particularly absent from many housing markets is an abundance of foreclosed and other distressed properties that have been reeling in investors and first-time buyers. So, in some cases buyers may have been turning to new homes when others in their price range have not been readily available.