Wednesday June 24, 04:36 PM
US new home sales down in May
WASHINGTON (AFP) - Sales of new homes in the United States dropped in May, government data showed Wednesday in a sign that the housing crisis is not yet over.
The Commerce Department said new home sales fell 0.6 percent in May from April to an annualized 342,000 units. Most economists had forecast a much stronger rate of 360,000.
The department revised April sales to 344,000, sharply below the 352,000 initially estimated.
On a 12-month basis, May new home sales were down 32.8 percent.
Analysts said the latest data on housing, the epicenter of global financial crisis arising from a mortgage meltdown, was a letdown.
"This is disappointing ... We thought there was scope for sales to head to the 400,000 mark," said Ian Shepherdson, chief US economist of High Frequency Economics.
"The housing market may be starting to come back, but the improvement is hardly a tsunami," said Joel Naroff, chief economist of Naroff Economic Advisors.
"While we did see a small improvement in existing home demand, new home sales were disappointing in May," he said.
But while the modest decline was a surprise, the fall off was not spread across the entire nation, Naroff noted, citing improved sales in the Northeast, Midwest and West.
A day earlier, the National Association of Realtors said US existing home sales rose 2.4 percent in May, marking the first back-to-back monthly increase since 2005, in a sign the troubled sector was steadying.
The industry group attributed the increase to "favorable affordability conditions and a first-time buyer tax credit" offered by the US government.
Sales rose to a seasonally adjusted annual pace of 4.77 million homes and apartments, NAR said.
The sales pace was below market expectations of an annualized 4.82 million but nonetheless was seen as a hopeful sign for the recession-ravaged economy.
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