Purchases of newly built homes climbed to an annual rate of 369,000 last month from 343,000.
Economists surveyed by MarketWatch had expected new-home sales to rise to an annual rate of 348,000 in May, seasonally adjusted.
Low interest rates, warmer weather and attractive prices all helped. The median sales price fell 0.6 percent last month to $234,500.
Sales were 19.8 percent higher compared to May of last year. Still, the sale of new homes remains far below its pre-recession peak and reflects an industry trying to dig out from its worst slump in modern times.
The housing industry could also face head winds in the coming months from a slowdown in the U.S. economy. The real estate market is one of the few that has continued to expand as spring gives way to summer.
Sales rose the most in the Northeast, up 36.7 percent. It was the biggest increase in the region in almost three years. In the South, sales jumped 12.7 percent and touched the highest level since April 2010.
Sales sank 10.6 percent in the Midwest and slipped 3.5 percent in the West.