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.
WASHINGTON — 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 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, indicating the nation’s housing slump is not only deepening but also widening to include previously untouched parts of the country. Tuesday’s report showed Seattle-area home prices declined 4.9 percent over the year ending in April, far less than the national average of 15.3 percent.
On Wednesday, Commerce reported the inventory of unsold new homes rose to 10.9 months in May, meaning it would take that long to exhaust the current supply of unsold homes.
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Because of the unusually high inventories, economists believe that home prices will keep falling until the spring of next year.
“Home builders have been doing everything they can to limit the production of new units and move existing inventory, but it hasn’t been enough to make a significant dent in the backlog yet,” said David Seiders, chief economist at the National Association of Home Builders.
The prolonged problems in housing have dragged down the overall economy, raising the risk of a full-blown recession.
For May, new home sales were down the most in the West, falling by 11.6 percent. Sales dropped 7.9 percent in the Northeast. But sales posted increases in the Midwest of 5.1 percent and were up 0.4 percent in the South.