Potential home buyers are still on the fence about purchasing a house, and as a result, sales of previously owned homes plunged last month, Bloomberg reported.

From December to January, sales of existing homes fell to the lowest level in nearly 12 years. Purchases fell 5.3 percent to an annual rate of 4.49 million, making it the slowest rate of home purchases since 1997, the National Association of Realtors (NAR) said today. Additionally, resales of single-family homes decreased 4.7 percent to an annual rate of 4.05 million, and sales of condominiums and co-ops dropped 10 percent.

“Housing is still going to have a rough patch in 2009,” said Rudy Narvas, a senior economist at 4Cast Inc. in New York. “Inventories are still high, so you’re going to have pressure on prices.”

The median sales price plunged to $170,300, down 14.8 percent from $199,800 a year earlier, the lowest price since March 2003 and the second-largest drop on record.

Last month, potential home buyers waited for President Barack Obama to unveil a stimulus plan in anticipation that it would provide incentives for first-time buyers. And just last week, Obama introduced a plan that combined low interest rates and an $8,000 tax credit for first-time home buyers.

The tax credit should help boost home sales by late spring or early summer, said Lawrence Yun, chief economist for the NAR.

Additionally, the Treasury Department said last week that as a result of the stimulus, it will be able to double the amount of stock purchase of Fannie Mae and Freddie Mac to as much as $200 billion for each company.