New home sales in the first month of 2011 made double-digit drops, driven by a lack of sales in southern portions of the United States. Investment bank Keefe, Bruyette & Woods reported the number of new home sales on a seasonally adjusted basis for January at 284,000 units, down 13% compared to December 2010 and down 18.6% compared to a year prior. (Click to expand.) Sales in the south region fell to 9,000 during the month, which drove down collective new home sales, KBW said. The South had been consistently selling between 12,000 and 16,000 new homes a month, according to the firm. This worries KBW, which said the data is modestly negative for homebuilders. "Most measures of housing activity remain subdued," KBW said. "While we continue to expect a modest seasonal increase in most housing data in the spring, the drop-off in sales in the South region is a concern." Research firm Capital Economics estimates there are a total 850,000 homes for sale with another 4.5 million properties in the foreclosure pipeline. KBW reported that the market is burning the inventory at a pace of 19-26,000 based on January figures. The inventory of new homes that entered the market during the month decreased 0.5% to 188,000 units, equivalent to 7.9 months of supply. Write to Christine Ricciardi. follow her on Twitter @HWnewbieCR.