Sales contracts of previously-owned homes plunged -2.6% in November 2007, a stat that suggests the contraction in the housing sector will persist in the immediate months ahead.

The National Association of Realtors announced that the pending home index, which tabulates contracts signed for homes but not closed, fell 2.6% in November 2007. Economists had expected a 0.7% decline in November 2007. The index rose in September 2007 and October 2007.

Further, the index declined 19.2% during the previous 12 months. The index declined in 3 regions: -13% in the Northeast, -4.1% in the Midwest, -2.1% in the West, but increased +2.3% in the South.

New homes sales fell by 9% in November 2007 to a seasonally-adjusted annual rate of 647,000 -- a 12-year low -- the U.S. Commerce Department announced Friday (pdf). The November 2007 statistic represents the lowest figure since April 1995.

Analysts had expected new home sales to decline to a seasonally-adjusted annual rate of about 720,000 units in November 2007.

For the past 12 months, U.S. new home sales declined 34.4%. Sales in the Midwest fell the most, 38.7%, followed by a drop in the South of 34.3%, a slump in the West of 33.8% and finally a decline of 28.1% Northeast.

The median sales price of new houses sold in November 2007 was $239,100, or down 0.4% in the past 12 months, while the average sales price was $293,300, or up 0.5% from November 2006.

U.S. Treasury Secretary Henry Paulson is negotiating an agreement with banks and other lenders to limit the surge in foreclosures by fixing interest rates on loans to subprime borrowers, people familiar with the Thursday meeting said, Bloomberg News reported.

"We've all agreed that there should be some sort of standardized approach to reaching more homeowners faster," U.S. Treasury Department spokeswoman Jennifer Zuccarelli told The Associated Press.

Subprime mortgages worth about $362 billion are expected to reset to higher interest rates in 2008, according to BusinessWeek magazine.

Market chatter Friday speculated on the plan's form, with no consensus readily emerging so far. Some Wall Street analysts expect Paulson's plan to focus on middle-income loans, excluding higher-income borrowers on the belief that they will able to obtain better terms themselves, and excluding lower-income borrowers who would not be able to afford their mortgage, even after a refinancing. Other analysts suggested that the plan may be more encompassing -- "capping" or limiting interest resets to predetermined rates.