New Home Sales Fall 33% in May to Record Low

New Home Sales Fall 33% in May to Record Low

By Tom Granahan
FOXBusiness

The U.S. housing market is in crisis.

A day after a disappointing read on the market for existing homes, the government said Wednesday that sales of new homes fell to their lowest level on record last month, a potentially crushing blow for an economy that is still looking for its footing.

The Commerce Department said new home sales fell by a stunning 32.7% in May, to a seasonally adjusted rate of 300,000. Sales were expected to be off sharply as a government program to prop up the market expired, but the results were far worse than even the most pessimistic outlooks.

Year-over-year, sales fell by 18.3%, and new –home sales in April were revised lower.

No part of the country was spared; new-home sales fell by 23.9% in the Midwest, sank 53.2% in the West, dropped 25.4% in the South, and fell 33.3% in the Northeast.

On Tuesday, the National Association of Realtors said existing home sales fell by 2.2%, in contrast to the 5% or so gain that was expected. The housing market is expected to weaken further now that the government’s home-buyer tax credit has expired. (To be eligible, would-be buyers must have signed a contract by April 30.) A weak jobs market

Earlier Wednesday, the Mortgage Bankers Association said mortgage applications filed in the U.S. fell by a seasonally adjusted 5.9% from the week before. Refinancings were lower by 7.3%, while purchase mortgages dropped 1.2%.

Applications filed to refi an existing mortgage fell to 73.8% of total applications from 74.8% the week before. Since the end of the home buyer tax credit contract deadline, the purchase index is off 39%