Sales of newly built homes rose 6.4 percent to a seasonally adjusted 433,000 annual rate in April, the NAHB said, citing U.S. Housing Department and Census Bureau data.

"Builders are gradually increasing sales, but tight credit conditions, particularly for first-time home buyers, are impeding a more robust recovery," said Kevin Kelly, chairman of the National Association of Home Builders and a home builder and developer from Wilmington, Del.

David Crowe, the association’s chief economist, said that despite the increase, the market still has not yet fully returned to usual activity levels.

"In a positive development, builders are adding inventory in anticipation of a further release of pent-up demand," Crowe said. "We are only about half-way back to what could be considered a normal market, but relatively low mortgage rates and affordable home prices are other factors that should help keep starts and sales  on a slow upward trajectory in the months ahead."