New Homes Sales Fall Unexpectedly

WASHINGTON (TheStreet) -- New home sales fell unexpectedly as the expiration of the tax credit for first-time homebuyers looms.

The Commerce Department said sales dropped 3.6% to 402,000, well below the 440,000 analysts expected. This was the first decline since March.

The news sent shares of home builders tumbling in morning trading. Toll Brothers(TOL Quote) is off 3% to $17.40, Pulte Homes(PHM Quote) is declining 4.1% to $9.19, NVR(NVR Quote) is falling 2.4% to $678.50, D.R. Horton is sinking 4.5% to $11.28, KB Home(KBH Quote) is losing 5.6% to $14.27 and Lennar(LEN Quote) is plunging 7.3% to $12.66.

Median sales prices sank 9.1% to $204,800.

Congress is considering extending the tax credit through March 31 and gradually phasing it out over the rest of next year. But if consumers aren't rushing to take advantage of the tax credit now, can they be expected to when they know it won't expire in the imminent future?

-- Reported by Jeanine Poggi in New York.

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