WASHINGTON, May 24 (Reuters) – Sales of new U.S. single-family homes tumbled to a two-year low in April, likely as higher mortgage rates and record prices squeezed first-time buyers and those in search of entry-level properties out of the housing market.

The fourth straight monthly decline in sales reported by the Commerce Department on Tuesday added to data last week showing a plunge in single-family building permits in April and continued weakness in sales of previously owned homes in suggesting that demand for housing was cooling.

But the housing market slowdown is likely to be limited by record low inventory. It is the segment of the economy most sensitive to interest rates. The Federal Reserve is raising borrowing costs to dampen domestic demand and tame inflation.

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