The U.S. Commerce Department reported June 25 that sales of new single-family homes fell 2.5 percent to a seasonally adjusted 512,000 annual rate in May.

The new numbers canceled out a small gain reported in April.

The National Association of Home Builder used the report as an opportunity to urge lawmakers pass legislation to encourage home sales.

"The fact that new-home sales are occurring at such a slow pace in the middle of the home buying season, with inventories only barely inching downward, is a strong indication of just how critical it is for Congress to move forward immediately with housing stimulus legislation," said association President Sandy Dunn, a home builder from Point Pleasant, W.Va.

The NAHB’s chief economist, David Seiders, said tax credits could help the situation.

"The nation's housing market clearly continues to display fundamental weakness, and today's numbers are in line with what builders have been telling us in our regular surveys," Seiders said. "Home builders have been doing everything they can to limit the production of new units and move existing inventory, but it hasn't been enough to make a significant dent in the backlog yet. A temporary home buyer tax credit would help release some of the pent-up demand among potential buyers who are holding off on a home purchase in hopes of prices going lower. This, in turn, could provide a significant shot in the arm for the overall economy."