The Associated Press
New home sales likely fell in May as potential buyers stopped shopping once they were no longer able to qualify for government tax credits.
Economists surveyed by Thomson Reuters expect sales of new homes to plunge nearly 19 percent from a month earlier to a seasonally adjusted annual rate of 410,000.
The Commerce Department’s report is scheduled for at 10 a.m. EDT Wednesday.
Federal tax credits of up to $8,000 for first-time buyers and up to $6,500 for existing homeowners have propped up the housing market this year. Buyers had to have a signed sales contract by April 30 to qualify for the tax credit. They have until June 30 to go to closing on their homes and still receive the credit.
The new home sales report is expected to drop because it measures sales agreements signed in May rather than completed sales.
Last week, the National Association of Home Builders said builders’ confidence about the housing market index fell to 17 in June, sinking five points after two straight months of increases. It was the lowest level since March.
New homes sales made up about 7 percent of the housing market last year. That’s down from about 15 percent before the bust.
That’s bad news for the economy. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders. The impact is felt across multiple industries, from makers of faucets and dishwashers to lumber yards.
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