The U.S. Department of Commerce is reporting sales of new homes dropped 2.9 percent in November, marking the slowest sales pace since January 1991.
Inventory of new homes for sale declined for the 19th consecutive month to 374,000 units, which is down from 402,000 units in October.
The median price of a new home sold in November was $220,400, a drop of 11.5 percent from the price one year ago.
Sales increased 2.7 percent in October compared to August.
"The fact that new-home sales continue to decline even in the face of substantial builder incentives, very favorable mortgage rates and improved housing affordability shows how fearful consumers have become about making a home purchase in the current economic environment," says Sandy Dunn, chairman of the National Association of Home Builders (NAHB).
"That's why it is absolutely necessary for the government to take action that will reassure home buyers and stimulate demand in order to help revive home sales and economic growth."
New home sales in the Northeast and West were up 14.3 percent and 11 percent, respectively, while the Midwest and South declined 16.4 percent and 7.1 percent, respectively. All four regions were down by more than 25 percent on a year-over-year (Y/Y) basis.
NAHB builder members expect market conditions to worsen, according to NAHB chief economist David Crowe.
"Sales of new homes are down 11.2 percent to date for the fourth quarter of 2008 compared to the third quarter," says Crowe.
"Meanwhile, our builder members are reporting worsening market conditions and sales expectations going forward, despite doing everything they can to get sales moving again and making progress in terms of reducing their inventories of unsold product.
"The reality is that more needs to be done. Government interventions in the form of an enhanced home buyer tax credit and a mortgage-rate buy-down have worked before, and can work again, to reassure buyers, kick-start demand and help turn the economy back in the right direction."