US home sales in unexpected fall

US housing
Image caption Sales fell but were still considerably higher than a year earlier

Sales of previously-owned US homes fell unexpectedly in May despite tax credits designed to encourage homebuyers, figures suggest.

Sales fell 2.2% to 5.66 million after a surge in sales in April, the National Association of Realtors (NAR) said. Analysts had expected sales to rise.

However, the NAR said sales were still strong and 19% higher than a year ago.

The group's chief economist, Lawrence Yun, said tax credits would continue to boost sales next month.

"We are witnessing the ongoing effects of the home buyer tax credit, which we'll also see in June real estate closings," he said.

But the number of home sales this month may be affected by delays in mortgage deals, he explained.

"Approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalise by the end of June due to delays in the mortgage process."

The average price of a house in the US was $179,600 (£121,400) in May, up 2.6% on a year ago.

To qualify for the homebuyers tax credit, buyers had to sign a sales contract by the end of April, but have until the end of June to finalise the sale.

As a result, some analysts expect home sales to drop off after this month.

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