Sales of new homes in the United States fell in August to a 17-year low, a housing market setback suffered even before the latest turmoil in financial markets.

Sales dropped 11.5% from July, more than forecast, to an annual rate of 460,000, the least since January 1991, the Commerce Department said Thursday. The median price of a new home dropped 6.2% from a year earlier, to $221,900, the lowest since September 2004.

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