Despite rapidly falling home prices, figures released Wednesday show Americans remain reluctant to buy a new home.

Sales of new homes fell in October to the lowest point in nearly 18 years while the median price of a new home dropped to the lowest level since 2004.

The Commerce Department reported that new home sales decreased 5.3% last month to a seasonally adjusted annual sales pace of 433,000 homes, the lowest level since January 1991, another period when the country was undergoing a steep housing downturn.

The median price of a new home sold in October fell to $218,000, down 7% from a year ago. It was the lowest median sales price since September 2004.

The drop in new home sales was bigger than analysts had expected and left sales 40.1% below where they were a year ago.

Despite the myriad efforts by the government to get the economy back on track by encouraging lending, the forecast for the U.S. housing market remains bleak.

Most economists believe the economy will righten itself only when housing prices stabilize and mortgage defaults return to normal levels. Only then can the big banks stop the bleeding from their toxic mortgage backed assets.

When that bleeding stops the fear and uncertainty that has frozen credit markets for months will dissipate and the economy will reenergized.

But the bad news just keeps coming.

On Tuesday, a report on home prices and downbeat earnings results from homebuilder D.R. Horton (DHI) showed further deterioration in the housing market. The Standard & Poor's/Case-Shiller U.S. National Home Price Index said home prices tumbled a record 16.6% during the third quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.

A report Monday showed sales of existing homes fell a bigger-than-expected 3.1% in October to an annual rate of 4.98 million units. The median or midpoint price for existing homes plunged to $183,000, down 11.3% from a year ago.

The National Association of Home Builders reported last week that its survey of builder confidence fell to an all-time low of 9 in November, down from 14 last month. Index readings higher than 50 indicate positive sentiment about the market. But the trade group’s index has drifted below 50 since May 2006 and below 20 since April.

The housing slump already has cost the country three million jobs in construction and related industries, and the home builders are urging Congress to help with increased support for the industry.