The Commerce Department said Wednesday that new home sales unexpectedly dropped 12.4 percent in July from a month earlier to a seasonally adjusted annual sales pace of 276,600. That was the slowest pace on records dating back to 1963. Year-over-year sales dropped 32.4 percent.

Home sales had surged in March and April as homebuyers hurried to get contracts signed as the $8,000 tax credit was about to end April 30.

In the latest government report, the median price of new homes sold was $204,000, almost 6 percent below June’s sales and a 4.8 percent off from July 2009’s sales.

An estimated 210,000 new homes were for sale at the end of July, the lowest since September 1968. Due to sluggish pace of home sales, increasing foreclosed properties, experts expect home prices will continue to decline and that inventory will take more than 9.1 months to sell such inventory up from 8 months of inventory in June. Six months of inventory is considered healthy.

New home sales declined nationwide. Sales dropped the most in the West, where sales declined more than 25 percent. In the Northeast, sales fell 13.9 percent. In the South and Midwest, sales dropped by just over 8 percent.