New-Home Sales Fall 2.5% As Prices Continue Decline
Sales of new homes tumbled for the sixth time in seven months in May while median prices kept plunging, underscoring the depth of the nation's housing woes.
The Commerce Department reported Wednesday that new homes were sold at a seasonally adjusted annual rate of 512,000 units in May, down 2.5 percent from the April level.
The median price of a new home sold last month fell to $231,000, down 5.7 percent from a year ago.
The report on new home activity in May followed reports Tuesday that showed record home price drops in April, showing that the nation's housing slump is not only deepening but also widening to include previously untouched parts of the country.
The inventory of unsold homes rose to 10.9 months in May, meaning it would take that long to exhaust the current supply of unsold homes.
Because of the unusually high inventories, economists believe that home prices will keep falling until the spring of next year.
The prolonged problems in housing have dragged down the overall economy, raising the risks of a full-blown recession.
For May, sales were down the most in the West, falling by 11.6 percent.
Sales dropped 7.9 percent in the Northeast but posted increases in the Midwest of 5.1 percent and 0.4 percent in the South.