The U.S. Census Bureau and the Department of Housing and Urban Development reported Thursday morning that sales of new homes in May slipped to a seasonally adjusted annual rate of 551,000, a decrease of 6% below the revised April rate of 586,000 and an increase of 8.7% compared with the May 2015 rate of 507,000. The consensus estimate from a survey of economists expected a rate of around 565,000. The April rate was revised downward by 33,000.

At the peak in 2005, new home sales posted a seasonally adjusted annual rate of nearly 1.4 million.

The Census Bureau also reported that the median sales price for new homes sold in May fell by $30,700 from $321,100 in April to $290,400, and the average sales price fell by $20,900 to $3358,900. At the end of May the number of new homes for sale totaled 244,000 and represented a supply of 5.3 months at the current sales rate.

In May, 51% of the estimated 51,000 monthly sales were for homes priced at less than $300,000. The percentage is seven points higher than the April rate. Sales of homes priced between $300,000 and $399,999 fell by a point to 24% of all sales. Sales of homes in the range of $400,000 to $499,999 fell from 11% of sales to 9%, and sales fell from 14% to 10% for homes sold in a range of $500,000 to $749,999. Home sales for properties priced above $750,000 accounted for 6% of all new home sales in May, up from 5% in April.

The big increase in sales of lower-priced homes is the primary factor in the sharp drop in median and average prices in May. That may be good news because lower-priced homes are typically the choice of first-time buyers.

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