New home sales fell sharply in August, down 11.5% to a seasonally adjusted annual rate of 460,000. The drop in sales was a new low in the current economic cycle. The report was well below expectations, as economists were expecting a number closer to 505,000. Sales are at the lowest levels since April 1991.

Inventories of unsold homes fell about 4.4% to 408,000, the 16th consecutive monthly decline. But because the sales pace has been so weak, the month supply has stayed high. At the August sales pace, the inventory represented 10.9 months’ supply of homes, up from 10.3 months in July.

Regionally, sales fell by 36.1% to a record low of 78,000 annualized in the West and by 31.9% to 32,000 in the Northeast. Sales were off 2.1% to 276,000 in the South, which is the largest region.

Sales of new homes are down 34.5% compared with August 2007.