Sales of new homes fared no better than sales of existing homes in July, as wary consumers stayed away from builders and Realtors alike last month.

According to data released Wednesday by the U.S. Census Bureau, new-home sales fell 12.4% in July compared to the previous month, landing at a seasonally adjusted pace of (ouch) 276,000, an all-time low since the government began collecting such data in 1963. While economists and industry watchers had forecasted a drop in activity, July’s new-home numbers proved worse than the 330,000-unit pace they had expected. Similarly, sales of existing homes also plunged in July, dropping 27.2% on a monthly basis.

The drops occurred despite historically low mortgage rates of less than 5% for a 30-year fixed-rate loan in July.

It doesn’t bode well for builders and their counterparts in the coming months. “It seems clear that demand for all forms of housing in July was extremely weak,” noted Carl E. Reichardt, a managing director and senior equity research analyst with Wells Fargo Securities in San Francisco. “In an environment of record-low mortgage rates, this indicates to us that consumers are responding poorly to price and payment as an incentive to purchase. This inelasticity appears unlikely to change until meaningful improvements in job growth, household formation, and consumer confidence materializes.”

Patrick Newport, U.S. economist at IHS Global Insight, also sees the economy as a defining factor in housing’s bumpy attempt at recovery. Why is the market so depressed? Confidence, of course, plays a big role.  But the key reason may be that the jobs recession severely depressed the rate of household formation,” Newport said. “During normal times, about 1.4-million households are added each year. But, according to [second-quarter Census data], the 12-month moving-average estimate for households has flattened. The key for housing going forward is employment growth.”

Until that happens, though, builders will need to stay lean and extraordinarily cost-conscious. Builders’ unsold inventory only stood at 210,000 homes in July, but at the current sales pace, that will take 9.1 months to burn off. “Given such low volume levels, we believe most builders will continue to struggle to reconstruct overall enterprise profitability in the intermediate term,” Reichardt said.

Pricing power is of course nonexistent, with the median price of a new home sold in July at $204,000. Similarly, the average price of a new home dropped to $235,300, which is the lowest level since March 2003, according to Newport.

Alison Rice is senior editor, online, at BUILDER magazine.

Learn more about markets featured in this article: San Francisco, CA.