Sales of new homes in the US unexpectedly dropped in December, the latest sign that government support is causing swings in the performance of the housing market.

New home sales fell by 7.6 per cent last month after falling by a revised 11.3 per cent in November, commerce department figures showed. Wall Street analysts predicted an increase.

The decline follows disappointing performances for existing home sales and home prices, which dipped after the original expiration date of the first-time homebuyer tax credit. Economists have argued that the credit, which was extended from last November to April, gave housing a false boost and ‘’stole from future demand’’.

“The hangover from the ‘end’ of the first-time homebuyer tax credit continues,” said Ian Shepherdson, chief US economist at High Frequency Economics.

Compared with a year ago, new home sales were off by 8.6 per cent in December. The estimated 374,000 new homes sold in 2009 was the fewest since official records began in 1963.

The median price of new homes in the US also fell in December, dropping by 3.6 per cent to $221,300.

‘’The figures have extended the relative under-performance of new home sales relative to existing home sales that we partly attribute to the high level of foreclosure sales that has weighed on the willingness of new home builders to bring product to market,’’ said Mike Englund, an economist at Action Economics.

Most housing analysts, however, project that home sales will pick up again in the spring as the new deadline for the expanded tax credit approaches