The Commerce Department's report on new home sales in July came out Wednesday and the news was not good. New home sales for the month fell 12.5 percent to the lowest annual sales pace among records dating back to 1963. It re-confirmed the struggles of a housing market which has been treading water since the April 30th deadline of federal homebuyer tax credits.

According to the report, July sales of new single-family homes sold at a seasonally adjusted annual pace of 276,000. This pace is a staggering 32.3 percent lower than the sales pace in July 2009.

Unlike reports on existing home sales, the new homes report is calculated based on contract signings, rather than closings. Consequently, it generally gives a more accurate picture of demand. The existing home sales report issued Monday was also rather grim, showing that sales dipped by more than 27 percent in July. The two reports together will likely serve to amplify concerns that we are headed into another recession or at least an extended period of dismal growth.

The drop-off in July sales was much larger than analysts had predicted, as economists took a June sales jump as positive news after a drop-off in May. Analysts say that the massive July plunge in sales came about not just because of the expiration of tax credits, but that it also means a shift in consumer confidence in the state of the recovery. Considering that interest rates continue to hover around record-low levels, the lack of sales activity is an indicator of just how far the market has to go.