U.S. new-home sales fall record 33% in May – Marketwatch
By Rex Nutting
WASHINGTON (MarketWatch) – Sales of new homes plunged a record 33% in May to a record-low level after a federal subsidy for home buyers expired, according to data released Wednesday by the Commerce Department. Sales dropped to a seasonally adjusted annual rate of 300,000, the lowest since records begin in 1963. The results were much worse than the the 20% decline expected. Sales fell sharply in all four regions, with sales down more than 50% in the West. Home builders reduced their inventories of unsold homes by 0.5% to 213,000, the lowest level in 39 years. The median sales price in May was $200,900, down 9.6% from a year earlier and the lowest since December 2003.
This comes as no surprise to me. Showings and sales have been way off since the April 30th end of the tax credit. I hope this is only temporary and the market will return to ‘normal’ soon.
I do hope that the government doesn’t decide that they need to create some new tax incentive to purchase a home. A quick look at the automobile industry shows that in general people don’t buy cars unless some incentive is offered. We need to take our medicine now and wean ourselves off the tax credit – as painful as that is right now!