Sales of new single-family homes -- helped along by a dip in prices -- edged up 0.4 percent in May in the first gain since last November, the government reported.
"The housing market is quite sluggish," said Thomas Holloway, senior economist at the Mortgage Bankers Association of America. "It's a buyers market. Inventories are quite high."
The modest advance follows a 5.2 percent drop in April and a 7.8 percent plunge in March, according to revised figures released by the Commerce Department and the Department of Housing and Urban Development.
"Sales of new one-family homes in May were at a seasonally adjusted annual rate of 532,000," the government said. "Before seasonal adjustment, an estimated 50,000 new houses were sold in May."
The median price of a new home fell to $128,500 in May from $133,400 in April, while the average price dropped to $150,400 in May from $154,200 in April, the government report said.
"The fact sales stabilized has something to do with the lower prices," said Robert Villanueva, director of forecasting at the National Association of Home Builders. "Affordable housing is still selling well where it can be found."
But chief economist Martin Regalia of the National Council of Savings Institutions said the May cost figures were pushed down by "closings in the lower end of the market.
"That's what drags the number down a little bit," Regalia said. "Housing prices in most areas are pretty stagnant. Nothing is looking better in this report. It's a pretty dismal report."
The number of new single-family dwellings remaining on sale at the end of May declined by 1.1 percent, and the supply of new homes on the market stood at 8.2 months, down from 8.4 months in April, the government said.