WASHINGTON (Thomson Financial) - Sales of new homes in the US fell dramatically in November as the lack of mortgage availability and rising consumer pessimism led to the worst rate in more than twelve years.

The Commerce Department today reported that last month’s new home sales were down 9 pct to a seasonally-adjusted annual rate of 647,000 units, the lowest sales rate since 621,000 in April 1995.

Forecasters had expected a far less severe slowdown, to about 720,000 units.

‘This was obviously a stunningly weak report, particularly given the aggressive price-cutting that homebuilders have been implementing in order to try to reduce inventory,’ said MFR economist Joshua Shapiro.

The median price of a new home fell 0.4 pct from last November to 239,100 usd, although the median was actually up 4.2 pct from October. The median price figures can be shifted, however, by the shifting mix of homes — higher- or lower-priced — sold in any given month.

‘It appears quite clear at this juncture,’ said Joseph Brusuelas of IDEAglobal, ‘that the consumer has reached a psychological point where expectations of future price declines have become entrenched. We consider this to be eminently rational behaviour on the part of potential homeowners and until the new homes market observes a decline in the median price of homes and falling rates, there will be little incentive to step up purchasing activity.’

Builders managed to cut 1.8 pct off their inventory of new homes on the market, to 505,000 units. But at the slower sales rate that raised the inventory overhang to 9.3 months supply, a 5.7 pct increase.

Sales estimates for October, September and August were cut by a total of 50,000. The Commerce Department has a long-running pattern of downward revisions to the first and even second reports of each month’s sales.

Economists say it is because of methodological problems in the survey, which counts sale contract signings that do not always materialize later into actual sales. They expect the November report to follow the same pattern of downward revisions.

Sales in the US Midwest fell 27.6 pct last month. Northeast sales were off 19.3 pct and sales in the South were down 6.4 pct. Only the West showed an increase, with sales up 4.0 pct.

For the year, sales in all regions are down 34.4 pct.