Sales of new single-family homes tumbled more than expected to a record low in May as the boost from a popular tax credit faded, according to a government report on Wednesday that added to worries of a slowing economic recovery.
The Commerce Department said sales dropped a record 32.7 percent to a 300,000 unit annual rate, the lowest level since record keeping started in 1963, from a downwardly revised 446,000 units in April. The fall unwound two months of gains, which had been inspired by a government tax credit for home buyers. Prospective home owners had to sign contracts by April 30. Analysts polled by Reuters had forecast new home sales sliding to a 410,000 unit-pace from April's previously reported 504,000 units. New home sales are measured at contract signing. A report on Tuesday showed sales of previously owned homes, which are recorded at contract closing, fell unexpectedly in May.
The expiry of the tax incentive has also resulted in a decline in new home construction and demand for home loans applications for loans to buy homes fell last week, staying near 13-year lows.
Last month's weak sales pace saw the supply of homes available for sale jumping a record 46.6 percent to 8.5 months' worth, the highest in nearly a year, from 5.8 months ' worth in April. However, the number of new homes on the market dipped 0.5 percent to 213,000 units, the lowest since November 1970.
The median sale price for a new home fell 1 percent in May from April to $200,900. In the 12 months to May, prices fell 9.6 percent, the largest decline since July 2009.
(Reporting by Lucia Mutikani; Editing by Neil Stempleman)