New-home sales might have climbed ever-so-slightly in April, but the median price took another big tumble, dragging down home builder stocks in early trading.

Ryland's (RYL) 9.13% decline led the sector's fall, followed by Beazer (BZH) being shaved by 7%. All of the major builders showed losses above 3.2%, with the Dow Jones U.S. Home Construction Index down 6.25%.

Sales of single-family homes increased by 0.3% to a seasonally adjusted annual rate of 352,000 compared to the prior month, the Commerce Department said Thursday.

March sales were revised lower, falling 3.0% to an annual rate to 351,000, Thursday's data showed. Originally, the government said March sales fell 0.6% to 356,000.

Economists surveyed by Dow Jones Newswires expected April sales up 2.5% to 365,000. Year-over-year, new-home sales were 34.0% lower than the level in April 2008.

For a new home, the median price dropped in April by 14.9% to $209,700, down from $246,400 in April 2008, the Commerce data Thursday said. The average price fell 19.2% to $254,000 from $314,300 a year earlier. In March 2009, the median price was $202,200 and the average was $257,100.

Also forcing prices lower are a glut of unsold houses on the market. At the end of April, there were an estimated 297,000 homes for sale, down from the 310,000 for sale at the end of March. But the ratio of houses for sale to houses sold in April remained high, at 10-to-1. It was 10-to-6 in March.

Lower prices aren't the only problem: The market is bedeviled by foreclosures. Buyers are gobbling distressed properties priced cheaply, and passing up on new homes.

On Wednesday, the National Association of Realtors reported existing-home sales increased 2.9% in April. Many of the sales continued to be foreclosures and short sales. The median home price dropped 15.4% to $170,200 from $201,300 in April 2008.

-By Dawn Wotapka, Dow Jones Newswires; 201-938-5248; dawn.wotapka@dowjones.com

-(Jeff Bater and Meena Thiruvengadam contributed to this report.)