LOS ANGELES - Sales of newly built U.S. homes collapsed in May, the government said Wednesday, falling to a record low and stirring concerns among some economists that the housing market would stumble again now that a popular federal tax credit for buyers has expired.
The Commerce Department said new homes sold at a seasonally adjusted annual rate of 300,000 units in May, a 32.7 percent drop from the revised April estimate and 18.3 percent below the May 2009 figure. It was the lowest sales pace and the biggest decline since the government began tracking figures in 1963.
Sales fell across all regions.
While many economists are expecting sales of both new and resale homes to falter in coming months as the effects of the federal tax credit begin to wane, the May drop was significantly larger than most had anticipated.
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“No two ways about it, these figures were just awful, when you look at the magnitude of the decline,” said Michael D. Larson, a housing and interest rate analyst for Weiss Research. “Obviously we were all expecting some kind of hangover impact, but this is like what you would have on New Year’s Day.”
The pessimistic read on new-home sales came as a survey released Wednesday by the Mortgage Bankers Association said applications for home purchases and refinancings fell again last week, marking the sixth decline in the past seven weeks. Taken together, the reports indicate the housing market is weakening despite the availability of the lowest fixed mortgage rates in more than a year.
The median sales price of new houses sold last month was $200,900, a 1 percent increase from the previous month but a nearly 10 percent decline from the year-earlier median. The Commerce Department estimated that 213,000 new houses were for sale at the end of May, representing a supply of 81/2 months at the current pace.