New-home sales tumbled to the lowest level in 17 years during October, while prices kept retreating.

Sales of single-family homes decreased by 5.3% to a seasonally adjusted annual rate of 433,000, the Commerce Department said Wednesday. September new-home sales rose 0.7% to an annual rate to 457,000; originally, the government said September sales climbed 2.7% to 464,000.

Economists...