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US new-home sales fell 7.8% in May

Business

In this June 13, 2019, photo a new home is under construction in Mechanicsville, Va. On Tuesday, June 25, The Commerce Department reports on sales of new homes in May. (AP Photo/Steve Helber)

WASHINGTON (AP) — Sales of new U.S. homes slumped 7.8% in May, as sales plunged in the pricier Northeastern and Western markets.

The Commerce Department said Tuesday that new homes sold at a seasonally adjusted annual rate of 626,000 in May, down from 679,000 in April. During the first five months of the year, purchases of new homes have fallen 3.7% compared to the same period in 2018.

Lower mortgage rates and a healthy job market have yet to unleash more home-buying. Sales of new homes plummeted 35.9% in the West and 17.6% in the Northeast. New-home sales rose 4.9% in the South and 6.3% in the Midwest, which are generally more affordable markets.

The median sales price of a new home fell 2.7% from a year ago to $308,000.

Still, there are signs that sales could recover.

Sales of existing homes — which are the bulk of the market — rebounded in May. They increased 2.5% to a seasonally adjusted annual rate of 5.34 million, evidence that lower mortgage rates might ultimately improve buying.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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