U
S new single-family home sales plummeted 13.7% in May, exceeding expectations as high mortgage rates dampened demand and swelled the inventory of unsold homes.

    The seasonally adjusted annualized rate of new home sales fell to 623,000 units last month, according to the Commerce Department's Census Bureau. This marked a significant decline from April's revised pace of 722,000 units.

    Economists had forecast a slower decline to 693,000 units, but the actual drop was more pronounced. New home sales are notoriously volatile and subject to large revisions, making it challenging to pinpoint trends.

    The inventory of unsold homes surged to 507,000 units in May, the highest level since late 2007. This increase is largely attributed to high mortgage rates, which have remained elevated due to economic uncertainty stemming from President Trump's tariffs.

    As a result, permits for future single-family housing construction plummeted to a two-year low in May, while builders reported a significant decline in sentiment and a rise in price cuts to reduce inventory bulges. Economists now expect residential investment to contract in the second quarter, following a slight decline in the previous quarter.