Sales of new homes fell 2.5 percent to 512,000 units in May from 515,000 units the previous month, the Commerce Department reported June 25. At the same time, the median price of a new home sold in May was $231,000, which reflected a 5.7 percent decline from a year ago.
May’s results represented the sixth time in seven months that sales of new homes declined.
While builders were able to reduce the number of unsold homes by 16.9 percent to 453,000, the inventory of new homes rose from a 10.7 months supply in April to a 10.9 months supply in May.
“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 West was the hardest-hit region, with new home sales falling 11.6 percent. Sales dropped 7.9 percent in the Northeast, but increased in the Midwest (5.1 percent) and in the South (0.4 percent).
News of declining new home sales came a day after the release of the Standard & Poor’s/Case-Shiller Index, which indicated that existing-home prices across 20 major U.S. cities have dropped a record 15 percent in the past year and are back to where they were in the summer of 2004.
Prices in the 20 cities -- down 17.8 percent from the peak two years ago -- were lower in April than they were a year earlier in all 20 of the major metropolitan areas as tracked by the Case-Shiller index.
Las Vegas, Miami and Phoenix saw the biggest declines, with prices falling by 26.8 percent, 26.7 percent and 25 percent, respectively. Los Angeles, San Diego and San Francisco were close behind with respective declines of 23.1 percent, 22.4 percent and 22.1 percent.
The areas least affected were Charlotte, N.C., which slipped 0.1 percent, and Dallas, which declined 3.4 percent.
It was also announced on June 24 that the Conference Board Consumer Confidence Index, which declined in May, had fallen further in June. The Index now stands at 50.4, down from 58.1 in May.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
“This month's Consumer Confidence Index is the fifth lowest reading ever,” said Lynn Franco, director of the Conference Board Consumer Research Center. “Consumers' assessment of present-day conditions continues to grow more negative and suggests the economy remains stuck in low gear.”