New Home Sales Drop in May as Housing Costs Continue to Rise

New home sales fell to the lowest pace in a year, with prices jumping 18 percent on a year-over-year basis, due to the high costs and uncertain availability of building materials, lots and labor. Sales of newly built, single-family homes fell 5.9 percent in May to a 769,000 seasonally adjusted annual rate, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The May number follows significant downward revisions to the April estimate and previous months' readings.

"New home prices have increased over the last year due to higher material costs and delays for deliveries," said Chuck Fowke, chairman of the National Association of Home Builders (NAHB). "Policymakers must take action to improve supply-chains in order to protect housing affordability. While lumber costs have come down in recent weeks, they are still more than 210 percent higher than a year ago. And OSB prices are up 380 percent over the last year."