New Home Sales Sink in May as Buyers No Longer Qualify for Tax Credits

New home sales dropped in May as probable purchasers halted shopping, once they were no longer capable of meeting the requirements for Government tax credits.

Economists reviewed by Thomson Reuters anticipate sales of new houses to fall almost 19% from a month previous to a seasonally modified yearly rate of 410,000.

The Commerce Department's report is slated for at 10 a. m. EDT on Wednesday.

Federal tax credits of about $8,000 for first-time customers and up to $6,500 for present home proprietors have supported the housing market, this year.

Shoppers had to have an inked sales agreement by April 30 to meet the criteria for the tax credit. They have time till June 30 to go to closing on their homes and still avail the credit.

The new home sales report is anticipated to plunge, since it calculates sales contracts signed in May instead of finished sales.

Last week, the National Association of Home Builders said that builders' assurance regarding the housing market index dropped to 17 in June, dipping five points after two direct months of rises. It was the smallest level since March.

New homes sales accounted for around 7% of the housing market last year. That is downhill from nearly 15% before the kaput.