Purchases of new homes fell in May to a record low as a tax credit expired, showing the market remains dependent on government support.
Sales collapsed a record 33%, to an annual pace of 300,000 last month from April, less than the median estimate of economists surveyed by Bloomberg News and the fewest in data going back to 1963, figures from the Commerce Department showed Wednesday. Demand in prior months was revised downward.
Sales were projected to drop 19%, to a 410,000 annual pace, according to the median estimate of 76 economists surveyed by Bloomberg. Forecasts ranged from 300,000 to 530,000. The government revised April's purchase rate down to 446,000 from a previously reported 504,000.
The median sales price decreased 9.6% from a year earlier, to $200,900, Wednesday's report showed. Purchases dropped in all regions last month, led by a record 53% drop in the West.
The supply of homes at the current sales rate jumped to 8.5 month's worth, from 5.8 months in April. There were 213,000 new houses on the market at the end of May, the fewest since 1970.
A report Tuesday showed sales of previously owned homes unexpectedly fell in May, adding to concern that the retrenchment following the end of the tax incentive will be deeper than expected.
Existing-home purchases, calculated when a contract closes, dropped to a 5.66 million annual rate, the National Association of Realtors said.
New-home sales are considered a more timely barometer of the market than purchases of previously owned homes, which account for about 90% of the housing market.
Other recent data shows the market is starting to stumble. Housing starts in May declined by the most since March 2009, and building permits, a sign of future construction, fell to a one-year low, data from the Commerce Department showed. The National Association of Home Builders/Wells Fargo confidence index for June fell by the most since November 2008.
