Business

US new home sales hit record low

US housing
Image caption Sales fell to their lowest level since 1963

New home sales in the US slumped by a third in May compared with the previous month as tax credits for homebuyers expired, official figures have showed.

Sales fell to an annual rate of 300,000, down from a revised 446,000 in April, the Commerce Department said.

This is the lowest rate since records began in 1963.

A fall in sales had been expected after buyers rushed to buy homes in April to qualify for tax credits, but analysts were surprised at the size of the drop.

The average sales price of new homes sold in May was $263,400 (£176,900).

On Wednesday, figures from the National Association of Realtors showed a much smaller fall in the number of existing homes sold during the month.

The disappointing figures have raised concerns about the health of the US housing market.

"We fear that the appetite to buy a home has disappeared alongside the tax credit," said Paul Dales at Capital Economics.

"After all, unemployment remains high, job security is low and credit conditions are tight."

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