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U.S. New Home Sales Unexpectedly Plunge 7.8% In May

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A report released by the Commerce Department on Tuesday unexpectedly showed a steep drop in new home sales in the U.S. in the month of May.

The Commerce Department said new home sales plunged by 7.8 percent to an annual rate of 626,000 in May after tumbling by 3.7 percent to a revised rate of 679,000 in April.

Economists had expected new home sales to climb by 1 percent to a rate of 680,000 from the 673,000 originally reported for the previous month.

The unexpected drop in new home sales came as sales in the West plummeted by 35.9 percent to a rate of 125,000 and sales in the Northeast showed a 17.6 percent nosedive to a rate of 28,000.

On the other hand, the report said new home sales in the Midwest and South increased by 6.3 percent and 4.9 percent, respectively.

The median sales price of new houses sold in May was $308,000, down 8.1 percent from $335,100 in April and down 2.7 percent from $316,700 in the same month a year ago.

The estimate of new houses for sale at the end of May was 333,000, representing 6.4 months of supply at the current sales rate.

Last Friday, the National Association of Realtors released a separate report showing a bigger than expected jump in U.S. existing home sales in the month of May.

NAR said existing home sales surged up by 2.5 percent to an annual rate of 5.34 million in April, while revised data showed existing home sales in April were unchanged at a rate of 5.21 million.

Economists had expected existing home sales to increase by 1.2 percent to a rate of 5.25 million from the 5.19 million originally reported for the previous month.

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