New-Home Sales fall 2.5pc in May to 512,000 pace

Homebuilders slash prices and further reduce inventories of unsold homes

June 25 2008 - Sales of new U.S. single-family homes tumbled 2.5% in May to a seasonally adjusted annual rate of 512,000 as sales in the West fell to a 26-year low, the Commerce Department estimated Wednesday.

The decline nearly matched economists’ expectations for a decline to a 510,000 rate from April’s revised 525,000. It was the lowest sales pace since the 501,000 rate in March.

New-home sales were down 40.3% compared with a year earlier.

Builders continued to slash their prices to sell homes. The median sales price in May was $231,000, down 5.7% from a year earlier. The market share for the very cheapest homes and for the most expensive each rose sharply in May.

Builders were also making progress on reducing the number of homes for sale. The number of homes on the market fell to a three-year low of 453,000, representing a 10.9-month supply at the May’s sales pace, up from 10.7 months in April.

New-home sales fall 2.5% in May to 512,000 pace
by Rex Nutting | MarketWatch