New home sales hit a six-month low in May as high mortgage rates continued to weigh on potential buyers.

Sales of new single-family homes fell 11.3% from the previous month to a seasonally adjusted rate of 619,000, according to Census Bureau data released Wednesday. On an annual basis, sales plunged 16.5%.

May's rate was the lowest since November. It also missed analyst expectations of 633,000 units, per Bloomberg data.

Affordability concerns have kept potential buyers from snapping up new homes and prevented sellers, many of whom are locked into lower mortgage rates, from moving. The average weekly rate on the 30-year fixed mortgage still hovers well above 6%, according to Freddie Mac.

Meanwhile, home prices have been hitting new record highs. Prices in the 20 largest US metros increased 7.2% in the last 12 months ending in April, per S&P CoreLogic Case-Shiller data released Tuesday.

The drop in sales activity in May contributed to an uptick in available inventory, Bright MLS chief economist Lisa Sturtevant said in an email. At the end of the month, the seasonally adjusted estimate of new homes for sale was 481,000, marking the highest month-end new home inventory since 2008.

“Homebuilders had been enticing buyers with rate buydowns and other concessions, but for some homebuyers, those financial incentives are no longer enough to get them on the building lot,” Sturtevant said.

"With more housing inventory and softening demand, expect the third quarter of 2024 to be a slower new housing market than the second half of 2023. However, while new home inventory is back at 2008 levels, other fundamentals in the market are significantly different than they were 16 years ago. The job market is strong, there is still pent-up demand among Millennials, and for all the increase in inventory, overall supply is still below pre-pandemic levels," she added.

Nancy Vanden Houten, lead US economist at Oxford Economics, said that new home sales "may remain tepid in Q3 as well." But she noted that "we expect sales to pick up in Q4 after Fed rate cuts get underway."

The central bank has projected one interest rate cut this year.

Housing stocks lost steam Wednesday morning on the heels of weaker data.

The SPDR S&P Homebuilders ETF (XHB) sank by 0.5%, alongside DR Horton, Inc. (DHI), the biggest US homebuilder, which slipped by 0.3%. Lennar (LEN) and Toll Brothers (TOL) were down by more than 0.5% and 0.2% in midday trading, respectively.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv.

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