New homes sales drop to lowest levels in nearly 50 years

The government also revised sales downward from previous months as April's sales rate dropped to an annual pace of 446,000 from a previously reported 504,000. The median sales price decreased 9.6 percent from the same month last year and down 1 percent from April to $200,900, Wednesday’s report showed.

May in general was a bleak economic month for the economy across the board. 

"May was a bad month for the economy," said J. Alfred Broaddus, former Richmond Federal Reserve president, in an interview on Bloomberg Television's "In Business With Margaret Brennan." When the Fed releases its policy statement today, he said, its language on the economy will be "markedly more pessimistic." 

A report on Tuesday showed sales of previously owned homes unexpectedly fell in May, adding to concern the retrenchment following the end of the tax incentive will be deeper than anticipated. Existing house purchases, calculated when a contract closes, dropped to a 5.66 million annual rate, the National Association of Realtors said.