WASHINGTON (AP) — Sales of new U.S. homes jumped 6.7 percent in May, with purchases in the South accounting for all of the monthly gains.

The Commerce Department said Monday that new homes sold last month at a seasonally adjusted annual rate of 689,000, up from 646,000 in April. The South reported monthly sales growth of 17.9 percent, while sales were flat in the Midwest and fell in the Northeast and West.

For the first five months of this year, new-home sales have risen 8.8 percent as a solid job market and shortage of existing homes on the market have boosted demand. In a sign that buyers are eagerly seeking out properties among a diminished inventory, there was a 17.4 percent surge last month in the sale of homes before construction begins.

"With fewer buying options among existing homes, homebuyer demand is shifting towards new builds," said Ben Ayers, senior economist at the insurance company Nationwide.

Buyers are also facing additional pressures as home values are generally rising faster than incomes and average 30-year mortgage rates have risen to 4.57 percent from 3.90 percent a year ago. Both of these factors are increasing the monthly costs for repaying home loans.

Aaron Terrazas, a senior economist at the real estate firm Zillow, said that sales growth was strong, yet construction was still running below historic levels given population growth.

"We're building roughly 2.7 homes for every 1,000 Americans - well below historic averages form the 1980s and 1990s of about 4.2 homes per 1,000 residents," Terrazas said.

Still, the government report on new-home sales can be volatile on a monthly basis, especially when any growth or setbacks are focused in one region of the country. May's median sales price dropped 3.3 percent from a year ago to $313,000. But the decline was largely because the sales growth was concentrated in the South, where new homes are generally cheaper.

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This story has been corrected to show the number of homes built for every 1,000 Americans, not 10,000.