US new home sales come in below expectations in May

Sales of new homes in the United States were weaker than traders expected last month, according to government data published Wednesday, as mortgage rates remained high.

New single-family home sales in May hit an annual, seasonally-adjusted, rate of 619,000, the Commerce Department said in a statement.

This figure refers to the number of homes sold over a whole year if sales continue at the rate seen in May.

This was 11.3 percent below April's revised figure of 698,000, and also less than market expectations of 650,000 sales, according to data from Briefing.com.

"New home sales surprised to the downside," Oxford Economics lead US economist Nancy Vanden Houten wrote in a note to clients, adding that the upward revisions to prior months had taken "some of the sting out of the weak May reading."

"The drop in new home sales last month is much sharper than the relatively small miss compared to the consensus, because sales over the preceding three months were revised up markedly," Pantheon Macroeconomics senior US economist Oliver Allen wrote in a note published Wednesday.

The current subdued sales figures also extend to existing home sales, which came in at a seasonally adjusted annual rate of 4.11 million last month, according to recent data from the National Association of Realtors.

Home sales have been impacted by the Federal Reserve's decision to hike its key short-term lending rate to a 23-year high as it looks to tackle elevated inflation, which has helped push other lending rates higher and indirectly affected mortgage rates as well.

The popular 30-year fixed-rate mortgage sits at just under 6.9 percent, according to the government-sponsored firm Freddie Mac, which buys and guarantees existing mortgages.

The median sales price of homes sold in May fell to $417,400, the Commerce Department said.