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NEW YORK (

TheStreet

) -- Sales of new homes fell sharply in January, a sign that the housing market continues to struggle even as the rest of the economy recovers.

New-home sales fell 12.6% to a seasonally adjusted 284,000 in January from a slightly downwardly revised 325,000 in December. December home sales were originally reported at 329,000.

The report disappointed, with consensus expecting new home sales to drop to 310,000, according to estimates from

Briefing.com

.

The median sale price for new homes sold in January was $230,600; the average sales price was $260,300.

About 188,000 homes were available for sale at the end of January. This represents a supply of 7.9 months at the current sales rate.

On Wednesday, the National Association of Retailers said

existing home sales accelerated in January. However, there was a drop in first-time home buyers, as credit conditions remain extremely tight. Most of the demand came from cash-rich investors who snapped up foreclosed homes at deep discounts.

Homebuilders were witnessing lackluster trading. Shares of

Lennar

(LEN) - Get Lennar Corporation Class A Report

were up 0.4%, while shares of

TheStreet Recommends

PulteGroup

(PHM) - Get PulteGroup, Inc. Report

and

D.R. Horton

(DHI) - Get D.R. Horton, Inc. Report

was down 0.5% and 0.1% respectively. The

SPDR Homebuilders ETF

was up 0.3%.

--Written by Shanthi Bharatwaj in New York

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