Because a special tax credit for purchasing new-homes expired in April, sales plunged in May.

• The drop in new home sales, which are at the lowest number since 1970, may be the result of buyers rushing to purchase homes before the tax credit expired.
• New home construction and applications for home-buying loans also declined in May.
• The decline may not be indicative of a weak recovery, but instead merely a reaction to the expired tax credit.

Facts & Figures

• New home sales fell -32.7% from April to May.
• Sales had increased by +12.1% in March and +14.7% in April.
• In May 2010, the median price of a new home was $200,900, which is 9.6% lower than in 2009.

Best Quote

“It’s a concern that even with very low interest rates, you’re seeing there’s an inability of home sales to move up at all in the past year, but there’s a reason to believe going forward things wouldn’t be quite as bad as they are in May.” – Michael Feroli, Chief U.S. Economist at J.P. Morgan Chase

Tags: home sales, new homes, real estate