US new home sales hit six-month low in May

By Lucia Mutikani

WASHINGTON (Reuters) - Sales of new U.S. single-family homes dropped to a six-month low in May as a jump in mortgage rates weighed on demand, offering more evidence that the housing market recovery was faltering.

New home sales declined 11.3% to a seasonally adjusted annual rate of 619,000 units last month, the lowest level since November, the Commerce Department's Census Bureau said on Wednesday. The sales pace for April was revised higher to 698,000 units from a previously reported 634,000 units.

Economists polled by Reuters had forecast new home sales, which account for more than 10% of U.S. home sales, edging to a rate of 640,000 units.

New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis. Sales slumped 16.5% on a year-on-year basis in May.