US new home sales drop 5.9% in May, second monthly decline

Sold signs stand in front of new homes under construction Monday, March 15, 2021, in Houston. Sales of new homes fell a bigger-than-expected 5.9% in April, a drop that analysts blamed in part on soaring home prices. (AP Photo/David J. Phillip)

WASHINGTON (AP) — Sales of new homes fell for a second month in May, dropping by a larger-than-expected 5.9%.

The May sales decline pushed sales to a seasonally adjusted annual rate of 769,000, the Commerce Department reported Wednesday.

The median price of a new home sold in May rose to $374,400, up 18.1% from a year ago.

The report on new home sales followed a report Tuesday from the National Association of Realtors that sales of existing homes fell for a fourth straight month in May. Even with the sales decline, the median price of an existing home sold last month hit a record $350,300, 23.6% higher than the median price a year ago, the association said.

While sales are slowing, the housing market remains hot. Homes that do hit the market often get multiple offers far exceeding the listing price. The demand has been fueled by the shortage of available properties and by low mortgage rates, reflecting efforts by the Federal Reserve to use low rates to help lift the economy out of the pandemic-triggered recession.