Sales of new US homes declined much more in November than many analysts had expected, raising concerns about the state of the world's largest economy.
Higher mortgage repayment costs have deterred buyers of new homes
New home sales fell by 9% to a annual rate of 647,000 in November, a 12-year low, the Commerce Department said.
Demand for new homes had been expected to fall as the US goes through its worst property slump in years.
Higher interest rates have deterred many buyers, while boosting repayment costs and mortgage default rates.
The median sale price of a new home fell to $239,100 (£117,000) in November, down 0.4% from the same month a year earlier.
House prices fell in all of the US regions except one, the West.
The Federal Reserve has been cutting interest rates in an effort to underpin economic growth and stave of the threat of recession.
It last trimmed its main borrowing cost earlier this month to 4.25%, and many analysts are predicting that more cuts will follow next year unless there is a pick up in consumer sentiment and spending.