Sales of newly built houses in the U.S. plunged 32.7% last month, the strongest evidence to date that the housing market was likely to stumble as the popular tax credit for buyers expired.
Economists are expecting sales of both new and previously owned homes to falter in coming months as the effects of the tax credit begin to wane. The credit offered as much as $8,000 to some buyers.
To qualify for the incentive, buyers had to have entered a purchase contract by April 30. New-home sales are recorded when a buyer signs a purchase contract. So April was the last month the credit would influence the new home numbers.
Sales of newly built single-family houses were at a seasonally adjusted annual rate of 300,000 in May, the Commerce Department estimated.