New-Home Sales Slip in May, Another Sign of Slow Recovery

AP New Home

Sales of new U.S. single-family homes slipped slightly in May, according to Commerce Department data on Wednesday that underscored that conditions in the hard-hit housing market remain fragile.

The annual sales pace of 342,000 was a 0.6 percent decline from April. Economists polled by Reuters had forecast sales would notch a 360,000 rate. It also remained far below the 509,000 annual pace of May 2008.

But the median sales price rose to $221,600 from $212,600 in April and was the highest since December, when it was $229,600. The median marks the half-way point, with half of all houses sold above that level and half below.

Economists believe the U.S. housing market will not begin to recover until home prices fall far enough to stimulate demand that will whittle down the overhang of unsold homes.

Inventories of new homes for sale fell 2.3 percent 292.000 in May, the lowest level since March 2001.

At the current pace of sales, this means it would take 10.2 months to clear stocks of unsold new homes, down from 10.4 months at last month's sales pace.

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