New data from the Commerce Department shows that sales of new homes plunged by a whopping 32.7% in May due to the expiration of federal tax credits. The record-low annual rate of 300,000 for new-home sales immediately sent stocks lower but they later regained some ground.

The data comes a day after the National Association of Realtors reported that sales of existing homes fell by an unexpected 2.2% in May, despite the home tax credit.

The seasonally adjusted annual rate for existing-home sales fell to 5.66 million units in May, down from an upwardly revised surge of 5.79 million units in April.

Lawrence Yun, NAR chief economist, said he expects one more month of elevated home sales. "We are witnessing the ongoing effects of the home buyer tax credit, which we'll also see in June real estate closings."