The accident took place on Saturday morning. The Albuquerque Police Department said that the balloon appeared to hit a power line. Four people were killed when the basket hit the ground and a fifth was taken to hospital, where he later succumbed to his wounds.
Video footage shows the basket plunging to the ground, the crumpled remains of the balloon trailing behind it.
Photos from the ground show that the balloon was later found in a residential area.
The incident cut off power locally. The cause of the accident is being investigated by the FAA and the National Transportation Safety Board.
The deadliest hot air balloon accident in US history occurred in Texas in 2016. A balloon carrying 16 people caught fire and crashed into a field, killing all on board.
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