WASHINGTON - Purchases of new homes in the United States unexpectedly fell to a 12-year low in December, ending the worst sales year since records began in 1963 and signaling little prospect for a recovery in residential real estate.

Sales decreased 4.7 percent to an annual pace of 604,000, the Commerce Department said Monday. The median price dropped 10 percent from December 2006, the most in 37 years.

"Today's numbers are a new blow," said Chris Rupkey, a senior financial economist at the Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, who forecast a decline to 613,000. "The broader economy is very, very close to falling over the edge. The Fed really needs to think aggressively."

The Commerce Department does not track data locally on new home sales. However, Houston-based Metrostudy recently released new home starts data that offer a glimpse into how local builders are doing.

Tampa Bay area homebuilders slashed construction by 59 percent in 2007, according Metrostudy, a housing research firm. In the fourth quarter, builders broke ground on 1,523 single-family and town homes in the combined markets of Hillsborough, Pinellas, Pasco, Hernando and Citrus counties examined by Metrostudy. That's down 50 percent from the same quarter a year ago.

Nationally, the median price of a new home fell to $219,200 in December from $244,700 a year earlier, Monday's report showed. For all of 2007, the median price rose 0.2 percent to $246,900.

Purchases of new homes in December were the fewest since February 1995, and followed a 634,000 rate the prior month. For the year, sales dropped 26 percent, the most since records began in 1963.

"We are in deep recession lows now in terms of new home sales and housing starts," said Lincoln Anderson, chief economist at LPL Financial Services in Boston. "We're seeing a bottoming, but it's a lot lower bottom than I expected."

Even as builders reduced inventories, the drop failed to keep pace with the decline in sales, pushing up the month's supply. The number of homes for sale fell to a seasonally adjusted 495,000 in December, the fewest since October 2005. At the current sales pace, it would take 9.6 months to sell all those houses, the most in more than two decades.

Sales By Region

Purchases dropped in three of four regions, led by a 6.5 percent decline in the South. The Northeast was the only region that registered a gain.

"With sales like this, that just encourages further cuts in housing starts," said Ethan Harris, chief economist at Lehman Brothers Holdings Inc. in New York. "The economy is looking a lot worse. It leans the Fed certainly toward more rather than less rate cuts."

The Fed on Jan. 22 cut the benchmark interest rate by three-quarters of a percentage point, its first emergency reduction since 2001, after global stock markets tumbled on increasing signs of recession.

Policy-makers said that "incoming information indicates a deepening of the housing contraction" and "a weakening of the economic outlook," in announcing the decision.

The central bank may lower the rate target by another half point on Wednesday, according to trading in fed funds figures.

Government Tuned In To Downturn

The government's economic stimulus plan last week also seeks to address the housing slump. The accord includes a provision allowing Fannie Mae and Freddie Mac, the largest U.S. mortgage finance companies, to temporarily buy mortgages of as much as $729,750, exceeding the $417,000 federal limit.

Sales of previously owned homes, which account for about 85 percent of the market, fell more than forecast in December, capping the biggest yearly slump in more than a generation, the National Association of Realtors said last week.

The median price of an existing single-family home dropped 1.8 percent in 2007, the first decline since records began four decades ago and probably the first since the Great Depression in the 1930s, the Realtors group said.

New-home purchases are considered a timelier indicator because they are based on contract signings, while existing home sales are calculated when a contract closes, usually a month or two later.

Purchases of new houses will fall another 15 percent this year, according to a forecast by the Mortgage Bankers Association. Sales of existing homes will drop 13 percent, the group said Jan. 14.

"These are extremely difficult times for all homebuilders," Steven J. Hilton, chief executive officer of Meritage Homes Corp., said in a Jan. 17 statement.