U. S. sales of new homes registered an 11.2% slip in January to a seasonally adjusted annual rate of 309,000, establishing a record low and wiping off all gains in the market for new homes over the past year, as the economy copes from recession.

However, economists surveyed by Dow Jones Newswires had predicted sales would rise 3.8%, to 355,000.

Its sales in December are reported to fall by 3.9%, revised from an originally reported 7.6% decline. The new-home sales report is volatile because it is based on a particularly small sample. The Government said it was 90% confident that the true change in new-home sales in January was between minus 25.2% and plus 2.8%.

"It's awful. This is with the home buyer tax credit. I don't understand people who say the housing market is turning", said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

The $8,000 tax credit and purchases of mortgage-related securities by the Federal Reserve is reported to have suppressed the housing market recovery from a three-year slump, which slipped the U. S. economy into the troubling waters of worst economic downturn since the 1930s.