Story from CBS Marketwatch. (H/T ECM)

Excerpt:

Sales of new single-family homes plunged 33% in May to a record-low level after a federal subsidy for home buyers expired, according to data released Wednesday by the Commerce Department.

Sales dropped to a seasonally adjusted annual rate of 300,000, the lowest since records began in 1963. April’s sales pace was revised down to 446,000 compared with the 504,000 originally reported. March’s sales were also revised lower.

The results were much worse than expected, and economists had expected a 20% decline to a seasonally adjusted annual rate of 405,000.

[…]Sales fell sharply in all four regions, with sales down more than 50% in the West.

The median sales price in May was $200,900, down 9.6% from a year earlier and the lowest since December 2003.

[…]Housing data in May have been dismal. Housing starts fell 10%, building permits fell 5.9%, mortgage applications dropped, and the home builders’ index fell by five points. The only bright spot was mortgage rates, which stayed very low.

Obama’s solution to this problem was government spending in the form of an $8000 federal tax credit “stimulus” for people who bought homes between February and April. How did that government-run top-down Keynesian stimulus solution work out?

Excerpt:

The tax credit likely pulled many sales forward into the first four months of the year. Sales increased a cumulative 29% between February and April. But once the credit expired, sales collapsed in May.

I guess maybe they were hoping to “prime the pump” which of course doesn’t work any more than “cash for clunkers” works.