(Bloomberg) -- China’s home sales growth abated in May following a brief rebound, underscoring weakening momentum in the economy.
The value of new home sales by the 100 biggest real estate developers rose 6.7% to 485.4 billion yuan ($68.3 billion) from a year earlier, according to preliminary data from China Real Estate Information Corp. That compares with gains of more than 29% in the previous two months. Sales fell 14.3% month-on-month.
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China’s property sector has avoided collapse but remains a major financial risk to the economy. Signs of weakness are emerging in the residential market after sales and prices rebounded briefly following a historical slump of about 18 months.
High-frequency indicators in recent weeks show momentum in home purchases is fizzling, despite Beijing’s effort to prop up the market. The country issued sweeping support measures for the industry in November.
“The basic picture was one of regression,” Bloomberg analysts Chang Shu and Kristy Hung wrote in a note. “Despite signs of steadier activity, though, the sector is still sick.”
Average new home price for China’s 100 major cities fell 0.01% in May compared with the previous month, reversing gains in April, according to China Index Holdings Ltd. Second-hand home price fell 0.25% from the previous month, as more homebuyers waited on the sidelines.
China’s recovery lost momentum in April after an initial burst of consumer activity. Economists surveyed by Bloomberg now expect China’s gross domestic product to expand 5.5% this year from a year ago, edging down from a prior estimate of 5.6%. Home price growth also slowed in April.
“Housing market in most cities have become lackluster since April as the release of pent-up demand for home purchases came to an end,” said Chen Wenjing, associate research director at China Index Holdings.
--With assistance from Lorretta Chen and Tom Hancock.
(Updates with data on new and second-hand homes)
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