WASHINGTON : Sales of new homes across the United States fell 2.5 percent in May from the prior month to a seasonally adjusted pace of 512,000 homes, according to a government survey on Wednesday.
Most economists had expected sales to fall more steeply to around 510,000 new properties amid one of the deepest and longest-running US housing slumps in decades. The latest decline came after sales rose an unexpected 4.8 percent in April to a revised 525,000 new homes, the Commerce Department reported.
Sales of new homes have declined since early 2006 when a multi-year housing boom abruptly ended.
The bleak snapshot on the housing market was released as Federal Reserve policymakers held a second day of interest rate deliberations in Washington.
Many analysts expect the Fed, led by chairman Ben Bernanke, to announce later Wednesday that it will keep its key base rate pegged at 2.0 percent, despite rising inflationary pressures stoked by soaring crude oil prices.
Economists say the Fed cannot afford to cut rates for the time being, which could offer relief to the stressed housing market, because of the mounting inflation risks.
New home sales have tumbled a dramatic 40.3 percent in the year to May, the monthly government report showed.
Sales fell in May as new home demand dropped in the northeast and the western parts of the United States. Sales in the south showed little change, but sales in the Midwest picked up.
The median sales price of new houses sold in May declined 5.1 percent compared with April to 231,000 dollars.
Some home builders are offering enticing incentives, such as financial assistance and free flat screen televisions, to prospective buyers in a bid to sell newly-built properties.
The housing downturn has been exacerbated by a sweeping credit crunch which has roiled the banking sector, making it harder for Americans to obtain mortgages and bank loans. - AFP/de
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