The US Commerce Department announced on Wednesday that new homes sales for the month of July plummeted by 12.4 percent, the biggest slide since the federal government started recording sales data in 1963.

The commerce department attributed the decline to soft spots in the housing market following the expiration of tax breaks for home buyers who also face the prospect of further slow downs in the job market.

Also, the department reported that new single-family home sales dipped by 32.4 percent to 276,000 units in the same period while sales of previously owned homes retreated by 27. 2 percent from the previous month as analysts raised their concerns on the true state of the country’s economic recovery.

While experts had anticipated a decline in the country’s home sales figures following the April 30 expiration of the $8,000 home buyer’s federal tax credit, the magnitude of the decline came as a shock for many.

A Bloomberg new report even reported that some economist were actually optimistic that a rebound could happen in July after the slide seen in May and the recovery achieved in June.

FTN Financial chief economist Christopher Low said that the big drop pointed to the possibility that apart from the disappearance of the tax break, people were simply unwilling to part from their hard-earned money.

Low said that considering that mortgage rates were not really that high, the plunging numbers were “reminders of how much work there is still left to do before housing can be deemed healthy again.”

Freddie Mac said that a 30-year fixed home loan tumbled by 4.42 percent on the whole month of July as Guy Cecala of Inside Mortgage Finance explained that while rates were very low at these times, banks were enforcing very strict mortgage underwriting requirements.

That translates, Cecala said, to the present reality that “a third or more of the borrowers who bought homes between the 2005 and 2007 period can’t qualify now,” effectively eliminating them from the list of trade-up buyers.

The Commerce Department also reported on Tuesday that new homes sales prices were being slashed while the housing inventory was running behind from the ideal numbers.

The department said that average sales price for new homes in July was $204,000, dropping by 4.2 percent from June and lower by 2.9 percent from prices carried by freshly-built homes in July 2009.

On the other hand, the commerce department revealed that as of the end of July this year, new home inventory was 210,000, which corresponded for a 9.1 month supply at the current sales pace.

The department reported too that weak spending were also seen from businesses in the same period as new purchases for manufactured durable goods shot up only by 0.3 percent as against the market projection of three percent increase.

Despite the upward crawl, analysts still expressed concerns as the minuscule gains were delivered by movements in aircraft orders, which experts agreed as a traditionally volatile sector.