U.S. new home sales plummet

New home sales in the United States collapsed in May, falling to their lowest level on record, the Commerce Department reported Wednesday.

Sales fell 33 per cent from April as buyers stopped shopping for homes when government incentives ended.

The Commerce Department said sales fell to a seasonally adjusted annual sales pace of 300,000. That was the slowestpace on records dating back to 1963.

Economists surveyed by Thomson Reuters had expectedMay salesof 410,000.

"It's pretty dismal," said Colin Cieszynski, market analyst at CMC Markets Canada.

"What this is suggesting is that more of the house sales got pulled forward into the first part of the year than anybody even imagined."

The sharp drop followed a surge ofbuying in March and April as buyersflocked into the market to take advantage of federal tax credits of up to $8,000 US on home purchases.

Those incentivesexpired at the end of April.