Home sales dropped 16.9 percent to 250,000 units from an upwardly revised January figure of 301,000.
Previously, the department said new home sales in January fell 12.6 percent from December to 284,000 on an annual basis
February's sales came in 28 percent lower than February 2010, when the annual rate stood at 347,000.
The Commerce Department said the median sales price for a new home sold in January fell sharply from $246,000 a month earlier to $202,100.
At the end of February, there were 186,000 new homes on the market, a supply of almost nine months at the current rate of sales.
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