New-home sales in California dropped 57 percent in July compared to the same month last year, the California Building Industry Association trade group and research company Hanley Wood Market Intelligence reported today, falling from 5,437 sales in July 2007 to 2,348 sales in July 2008. Similarly, new-home sales in California dropped 58 percent year-over-year in June.

The median price of new homes in the state dropped 11.9 percent, falling from $419,990 in July 2007 to $369,991 in July 2008, according to the report. Single-family home sales dropped 54.4 percent year-over-year in July, while single-family home prices dropped 17.4 percent.

"Continued problems in the credit markets, including the recent federal bailout of Fannie Mae and Freddie Mac, indicate just how broad the problems facing the housing market are," stated Jonathan Dienhart, director of published researched for Hanley Wood. "While ensuring the survival of Fannie and Freddie was the best course of action in the short term, the long-term ramifications are not yet clear. For now, access to credit will remain challenging for many potential home buyers, and declining prices will mean difficult times for existing homeowners."

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