Housing's Pain Not Easing

"Inventories will continue to weigh on sales into 2008," York said. "The troubling half of the story is the percentage of new homes completed in inventory -- reaching their highest level since the last recession. This will pressure builders to sell homes."

Homebuilders fell on the report. WCI Communities(WCI Quote) tumbled 7.3% to $3.07, Hovnanian(HOV Quote) was down 4.1% to $7.31, and Lennar(LEN Quote) fell 3.3% to $14.57.

On Wednesday, the National Association of Realtors reported a worse-than-expected 1.2% month-over-month drop in existing-home sales. The median price of an existing home slid 5.1% from a year earlier, while inventories swelled to 10.8 months of supply.

Existing-home sales, which make up a much bigger portion of the real estate market, are based on sale closings, while new-home sales are based on contracts signed. The new-home sales don't take into effect cancellations, which are soaring amid the housing slump, so the data can be skewed.