New home sales slip 2%

June 23, 2011: 11:19 AM ET

NEW YORK (CNNMoney) -- Sales of new homes fell 2.1% in May, after rising for two months in a row, as the housing market continues to struggle.

The Census Bureau reported an annual sales rate of 319,000 new homes last month. That was down from a revised rate of 326,000 in April. But compared to a year ago, sales are up 13.5%.

And the rate in May was better than expected. Economists had forecast a sales rate of 305,000 in May, according to consensus estimates from Briefing.com.

After falling to an all-time low of 278,000 in February, new home sales have been one of the weakest sectors of the economy.

Desperate for a housing rebound

Sales peaked in July 2005. But ever since the recession took hold in 2008, home builders have remained reluctant to boost production -- especially with unemploymentstill painfully high.

The glut of foreclosures on the market has also sliced demand for new homes, as financially strapped consumers look for better bargains.

A separate report from the National Association of Realtors on Tuesday showed that sales of existing homes dropped 3.8% in April, slightly more than expected.

The average price of new homes sold in May was $266,400, according to the report. That was up from $265,000 in April.

There were an estimated 166,000 new homes for sale. At the current sales rate, it would take 6.2 months to sell through that inventory, the report said.

New home sales in the Northeast declined the most last month, dropping 27%. The only region to see sales rise was the South, which reported a 2.4% increase.  To top of page


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