The bad news continued for the housing industry as sales of new homes were at a seasonally adjusted annual rate of 588,000 units in January 2008, a 2.8 percent decrease below the revised December 2007 rate of 605,000.

The new-home sales report, released monthly by HUD and the Census Bureau, also found that the January numbers were 33.9 percent below the January 2007 estimate of 890,000 units.

The median price of new houses sold in January 2008 was $216,000; the average sales price was $276,000. On the inventory front, the seasonally adjusted estimate of new houses for sale at the end of January was 482,000. This represents a supply of 9.9 months at the current sales rate.

"January's report was a mixed bag," said Patrick Newport, U.S. economist at research group Global Insight.

"Sales were down again, and prices were falling at double-digit rates, but inventories continued to drift down," he continued. "Although the downward trend in sales shows no sign of letting up in January, Global Insight expects that builders will continue to aggressively price new homes and that sales will bottom out later this year," Newport concluded.

Home sales were down in January in almost all regions with the Northeast making the biggest slide at 10.3 percent. Sales were off for the month in the Midwest by 7.6 percent; 2.4 percent in the South; but edged up 2.2 percent in the West.