Fred Business News - New home sales remained near historically low levels in May, as the housing market continues to struggle with a huge oversupply of housing inventory.

The Census Bureau reported Wednesday that May sales of new single-family homes came in at a seasonally adjusted annual rate of 512,000, down 2.5% from April's revised reading of 525,000.

"The market is still very much in distress," said Jared Bernstein of the Economic Policy Institute. "We are closer to the bottom than we were a year-and-half ago, but we're not there yet."

The reading was higher than the consensus forecast of 510,000, according to estimates compiled by Briefing.com. But home sales are down more than 40% from May of last year and are 63% off the peak reading of 1.38 million homes sold in July of 2005.

Monthly new home sales reached their lowest point in September of 1981, when they tallied just 338,000. The Census Bureau has tracked the data since 1963.

The decline was most pronounced in the West, where new home sales fell 11%, to 114,000 in May from 129,000 in April.

"Where the bubble was inflated the most it's now deflating the fastest," Bernstein said. "That's why the West continues to post double digit losses."

Sales also fell sharply in the Northeast, down 8%, but were flat in the South. May sales in the Midwest increased 5%.

Falling home prices. The report also showed that the median sale price of new homes sold in May was $231,000, down 6% from 246,100 in April. The average sale price fell 3% to $311,300 in May from $321,000 last month.

"There is no way, in my mind, that prices have finished their downward trek," Bernstein said. He thinks prices will decline another 15% before the market stabilizes.

About Fred: Fred is president of The I Team Organization. With a back ground in agriculture Fred has lead many successful business ventures.