Sales of new homes plunged a record 33% in May to a record-low level after a federal subsidy for home buyers expired, according to data released Wednesday by the Commerce Department. Sales dropped to a seasonally adjusted annual rate of 300,000, the lowest since records begin in 1963.
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The Commerce Department said sales dropped a record 32.7 percent to a 300,000 unit annual rate, the lowest level since record keeping started in 1963, from a downwardly revised 446,000 units in April. The fall unwound two months of gains, which had been inspired by a government tax credit for home buyers.
Stocks are off across the board on the news. There was a fear among many that this sales credit would go the way of most of the government induced stimuli, most namely cash for clunkers. That is that as soon as the stimuli ended the sales would deflate. That's what happened in May. So, the housing market continues to be in a state of disarray.