WASHINGTON (AP) — Sales of new homes in the United States rose 3.6 percent in July to match a two-year high reached in May, the latest sign of a steady recovery in the housing market.

The Commerce Department said Thursday that new-home sales reached a seasonally adjusted annual rate of 372,000. That's the same as in May, which was the highest since April 2010.

The report is "the latest in a series of data points suggesting a durable housing recovery is underway," Dan Greenhaus, chief economic strategist at BTIG LLC, a brokerage firm, said in a note to clients.

In the past 12 months, sales have jumped 25 percent. Still, the increase is from a historically low level. New-home sales remain well below the annual pace of 700,000 that economists consider healthy.

The housing market is making a modest but steady recovery in part because homes are more affordable: Mortgage rates have fallen to near-record lows. Housing prices are about one-third lower than at the peak of the housing bubble in 2006. Those trends have helped lift sales of both new and previously occupied homes.

Sales of previously occupied homes increased in July from June, the National Association of Realtors said Wednesday. Sales have jumped 10 percent in the past year.

Other recent reports also point to a recovery. Home prices have begun rising nationwide. They increased 2.2 percent in May from April, according to one leading index. That was the second straight increase after seven months of flat or declining prices.

Builders, meanwhile, are growing more confident because they're seeing more traffic from potential buyers. An index of builder confidence rose to its highest level in five years in August.

Builders responded by applying for the largest number of building permits in nearly four years last month. They broke ground on slightly fewer new homes in July than in June. But that was after the number of housing starts had reached a 3½-year high in June.

Though new homes represent only a small portion of the housing market, they have a disproportionate impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics compiled by the National Association of Home Builders.

The housing market has a long way to go to reach full health. Some economists forecast that sales of previously occupied homes will rise 8 percent this year to about 4.6 million. That's still well below the 5.5 million annual sales pace that is considered healthy.

One trend holding back sales is that many people are still having difficulty qualifying for home loans. Banks have tightened credit standards for mortgages, according to a report last month by the Federal Reserve.

Another factor holding back sales is that there aren't many newly built homes available. New homes for sale dipped last month to 142,000, the lowest on records dating back to 1963.

A six-month supply is generally considered healthy by economists. At the current sales pace, it would take 4.6 months to exhaust the July supply.