Fewer people bought new homes in December, making 2011 the worst sales year on record.
The Commerce Department says new-home sales fell last month to a seasonally adjusted annual pace of 307,000. The pace is less than half the 700,000 that economists say must be sold in a healthy economy.
Total sales last year were less than the 323,000 sold in 2010, making it the worst year on records dating back to 1963.
The median sales prices for new homes dropped in December, as builders continued to slash prices. It fell 2.5 percent to $210,300.
The decline in sales comes as other signs suggest the depressed housing market is starting to recover. Construction picked up, sales of previously occupied homes are rising, and builders are slightly more confident.