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Sales of new U.S. homes fell to a five-month low in May, adding to signs of weakness in the sector despite lower mortgage rates.
Single-family home sales dropped 7.8% to a 626,000 annualized pace that missed all estimates in Bloomberg’s survey of economists, from an upwardly revised 679,000 rate in April, government data showed June 25. The median sales price decreased 2.7% from a year earlier to $308,000.
The weaker report suggests growing headwinds in the housing sector despite lower mortgage rates and elevated consumer sentiment. Affordability remains a problem for prospective buyers, despite a faster pace of wage gains.
The data add to housing indicators showing a mixed outlook in recent months. The S&P CoreLogic Case-Shiller index on June 25 showed home-price gains in 20 U.S. cities decelerated in April for a 13th straight month to the weakest pace since 2012. Elsewhere, existing home sales gained in May as homebuilder sentiment deteriorated in June.
The number of properties sold for which construction hadn’t yet started eased slightly to 195,000, indicating potential buyers still have ample supply in the pipeline. The number of new homes for sale at the end of the month was little changed at 333,000.
The supply of homes at the current sales rate increased to 6.4 months from 5.9 months in April.