Sales of new U.S. single-family homes in August fell to its lowest point in more than 17 years while prices hit four-year lows, a government report on Thursday showed, in a sign of continued weakness in the housing sector.

The annual sales pace was down 11.5 percent from July to 460,000 homes and was sharply off the 510,000 pace expected by economists. The August decline was the biggest since November 2007.

The median sales price of $221,900 was off 5.5 percent from July, the lowest since $211,600 in September 2004.

The August sales pace was the weakest since 401,000 in January 1991.

The U.S. dollar extended losses on the bleak home sales report. However, U.S. 30-year bond prices and U.S. stocks were higher on hopes that a financial bailout package will be approved by Congress. That plan would give Washington $700 billion in buying-power to acquire soured investments -- mostly tied to failed mortgages -- that have shaken credit markets.

The 515,000 annual pace originally reported for July was revised to 520,000 homes.

The inventory of homes available for sale in August shrank 4.4 percent to 408,000, the lowest since August 2004. However, sales weakened so much that the months' supply at the current sales pace rose from 10.3 months in July to 10.9 months in August.

Home sales in the West fell to an annual rate of 78,000 -- the lowest April 1982. Sales in the Midwest were the only region to rise, up 7.2 percent.

The sales pace for existing homes fell to 4.91 million in August, according to a Wednesday report that showed more weakness for home resales than economists had expected.