New home sales dropped sharply in February, marking the third straight month of declines in the housing market.

The 17 percent plunge caused the slowest sale pace on record since nearly half a century ago. Economist say the latest numbers are a bad sign for the already weak housing market.

"Falling housing prices of existing homes are robbing demand for new houses and until that changes, the housing market will be in trouble," said Yelena Shulyatyeva, an analyst at BNP Paribas.

New home sales now account for only 5 percent of total home sales so far this year. In a healthier housing market, new home sales would typically represent closer to 15 percent.

The median price for a new home has also dropped 14 percent.

Poor sales of new homes mean fewer jobs in the construction industry, which normally powers economic recoveries.