New home sales plunge

Pace of new home sales down 16.6 percent from December as latest reading on real estate much weaker than forecasts.

February 28 2007: 10:09 AM EST

NEW YORK (CNNMoney.com) -- New home sales plunged in January, as Wednesday's latest reading on the battered real estate market came in much weaker than forecasts.

New homes sold at an annual rate of 937,000, down 16.6 percent from the December reading of 1.1 million. Economists surveyed by Briefing.com had forecast only a narrow drop to a 1.08 million pace.

The median price of a new home fell 2.1 percent from a year earlier.

Home builders' have been particularly hard hit by the downturn in home sales and home prices. Hovnanian Enterprises (Charts) said Tuesday it expects to report a net loss in the most recent quarter. Toll Brothers (Charts) reported a sharp drop in earnings last week, while KB Home (Charts) reported a net loss in the most recent quarter earlier this month.

Other leading builders reporting weakness in prices and reduced sales include Lennar (Charts), Pulte Home (Charts), D.R. Horton (Charts).