New home sales in August plunged to their lowest rate in over seven years, as tighter credit and rising inventories continued to cripple a national housing industry that was booming only a year ago.

Purchases of new homes fell to an annual rate of 795,000, an 8.3 percent decline from July, as inventory levels rose to their highest level since March. The median price for a new home was down 7.5 percent from a year ago, to $225,700, the Commerce Department said this morning.

The sales figures were released as KB Home, a major home builder, reported a $35.6 million loss in the third quarter, or 46 cents a share, compared to net profits of $153.2 million a year earlier. KB Home, based in Los Angeles, had a 32 percent drop in revenue from the same period last year.

KB was forced to write down almost $800 million in inventory and goodwill value after the subprime mortgage crisis caused turmoil in the credit market and high rates of foreclosure. Those losses outpaced the company’s gains from selling its 49 percent stake in a French subsidiary. The company’s stock was up 0.54 percent, to $24.22, in early trading.

The latest data gave a fuller picture of the distress in the housing sector. This morning’s news comes on the heels of a 4.3 percent drop in existing home sales and a dismal third-quarter report from Lennar, another large home builder that recorded the largest quarterly loss in its history. New home sales are now down over 21 percent from a year ago.

“Our third quarter results reflect the seriously challenging market conditions that prevail for home builders across most of the nation,” KB’s chief executive, Jeffrey Mezger, said in a statement. “At this time, we see no signs that the housing market is stabilizing and believe it will be some time before a recovery begins.”

Analysts concurred, predicting that the disappointing numbers were only the start of a continued decline in the housing sector that could stretch across multiple quarters.

“Anybody that’s expecting a turnaround in housing anytime soon is going to be disappointed,” said Mike Schenk, a senior economist at the Credit Union National Association. “It’s going to be a long, slow process.”

In a spot of sunlight for the economy, the number of new unemployment claims filed last week dipped to 298,000, its lowest level since early May. The figure, a 15,000 decrease from the week ended Sept. 14, beat analysts’ expectations, though some analysts warned against extrapolating a trend from a single week’s data.

WASHINGTONIANS of means tend to buy their second homes at the seashore. But increasingly they are heading to Deep Creek Lake, a mountain resort region in the Allegheny Mountains of far western Maryland for relief from traditional urban stress, humidity and Washington’s own particular brand of political ennui.

What draws them is the serpentine, 13-mile-long lake, on which are some 3,100 docks and slips, to which are tethered as many as 5,300 boats. Deep Creek Lake is the largest artificial body of water in the state, created in 1925 when a Pennsylvania utility flooded the natural creek to generate electricity.

The lake, in Garrett County, quickly became a vacation spot for the affluent of Pittsburgh, who built log cabins on its shores. When the completion of Interstate 68 in 1991 cut the drive from Washington to three hours, real estate agents say, the number of Washingtonians flocking to the area surged — along with home prices.

Laura and John Domingues, who live in the Maryland suburbs of Washington, found their lot by the lake three years ago, paying $180,000 for .64 acre one block from the water. (Because much of the county is unincorporated, many people don’t live in a town; you’re either near the water or you aren’t.)

“We just fell in love with the place and started looking for property,” said Mrs. Domingues, 42, the marketing director for an investment firm. They are now in search of a builder.

“I can see myself sitting at the piano four or five hours a day, cooking a gourmet meal two hours a day, and going for a hike,” said Mr. Domingues, 54, a malpractice lawyer in Rockville, Md. “I can see myself retiring in this area.”

If so, he will join many other boomers who first came as weekenders, then found themselves settling in for good.

One such group of half a dozen couples call themselves the Geezers. They get together every Wednesday night for double-nickel (55 plus) discount pizza at Uno’s on Route 219, or senior night at the Garrett 8 Cinema. They are in the process of shifting their lives (or have already shifted them) from the Washington area to the mountaintop, the high plateau that describes Garrett County, Maryland’s westernmost county.

Fred and Erin Peacock, who count themselves as Geezers, started with weekends, then retired to the lake. They still keep a condo in Columbia, Md., midway between Washington and Baltimore, but go there less and less. “The truth is, it’s like a motel I stay at when I visit my kids,” Ms. Peacock said. “Fred never wants to go back.” They live in a 2,600-square-foot log-sided house they bought in 2002 for $208,000 in Yough River Estates.

Similarly, Dennis Friedman, 58, a cardiologist who lives in the Washington suburb of Potomac, Md., thrives on getaways to the lakefront home he bought in 1983 for $320,000. “I’m somewhere between a visitor and a local now,” he said.

The Scene

Upscale rustic defines life here, a style that arrived before the highway and the lake. In the 1870s, the B & O Railroad’s president, John W. Garrett, for whom the county is named, built the Deer Park Hotel as a retreat for his Gilded Age buddies. The 1884 Queen Anne Victorian train station, now a gift shop, in the county seat, Oakland, is a remnant of that era. Garrett County today is divided culturally and economically between the lake people and everyone else. The latter includes coal miners and farmers, and Amish communities around Grantsville in the north and Pleasant Valley to the south. Working people don’t frequent the lake, except as seasonal employees.

The lake is all about water sports, like Jet-Skiing and powerboating. There are also tamer pontoon boats and a few sailboats. On a mountainside that overlooks Deep Creek, the Wisp Resort has a golf course and downhill skiing in season. The Adventure Sports Center, a 1,700-foot-long water course on top of Marsh Hill, is nearby.

There are also three state parks that have trails for hiking and cross-country skiing. The area is busiest from Memorial Day to Labor Day, but the population swells again in mid-October during the Autumn Glory Festival, which includes banjo and fiddle championships and antiques and art shows. This year’s festival will run from Oct. 10 to 14.

Oakland, a few miles south, is the region’s cultural hub. It has its own community theater and free summer concerts. And the urban influx has contributed to its modest gentrification, with a community art gallery, a bookstore, a coffee shop, a few boutiques and antiques shops.

“Second-home owners and transplants are our very own clientele,” said Greg Elliott, a transplant from around Baltimore who owns Studio 24E, a shop that carries high-end handbags, Versace sunglasses and jewelry priced in the thousands.

Across the street, Englander’s Pharmacy has been turned into an antiques store but has kept its fountain and its lunch counter. A few miles north of Oakland, the Arrowhead Market sells The New York Times, The Washington Post and The Wall Street Journal, along with the local Oakland Republican. The Fireside Deli and Wine Shop sells fancy sandwiches and wine, with a Saturday wine tasting. Even Foodland has a fine-foods section.

Pros

Summer temperatures are at least 10 degrees cooler than in the cities to the east, and opportunities for outdoor activities are abundant. Scenery runs from the merely restful — glades bathed in morning mist — to spectacular mountaintop views and lake sunsets. With the Interstates, Deep Creek is remote yet accessible.

Cons

The Deep Creek region has few designer shops and no malls. Sophisticated palates might find the area cuisine lacking, and Sunday liquor sales are illegal. For those who don’t own lakefront property, access to the water is limited.

The Real Estate Market

Prices fall into three categories, with lakefront the costliest, followed by lake access (with dock rights), and lake area, said Ed King, an agent with Long & Foster. In August, there were 18 properties listed for $1 million or more. In the exclusive Reserve community, lakefront lots alone have sold for $1 million, with one on the market for $2.1 million.

Lakefront property is so valuable that residential trumps commercial. In 2001, Doug McClive sold his restaurant, McClive’s, to a developer who built water-access condos that now sell for $600,000. And most of the old lakeside cabins became teardowns.

In general, the second-home market has held up reasonably well, real estate agents say, especially at the high end on the lakefront. But starts for new homes are down 40 percent in 2007 from 2006, and there have been some price cuts on lake area properties, which sell for between $200,000 and $500,000.

Although construction off the lake has lagged, new homes are still rising on the ridge above it, with “ski-in, ski-out” models being built by the Wisp resort.

LAY OF THE LAND

POPULATION Garrett County, Md., with Deep Creek Lake at its center, has 29,859 residents, according to a 2006 Census Bureau estimate.

SIZE Garrett County is 648 square miles. Deep Creek Lake covers 3,900 acres, with 69 miles of shoreline.

WHO’S BUYING Professionals and executives from the Washington area, as well as Baltimore and Pittsburgh.

GETTING THERE The Deep Creek Lake area is about a three-hour drive from Washington. There is a small county-owned airport that recently expanded its runway to 5,000 feet to accommodate small private jets.

WHILE YOU’RE LOOKING Good Timber Bed & Breakfast (2159 Mayhew Inn Road, Oakland; 301-387-0097; www.goodtimber.net) is a large yet intimate log lodge near a secluded lake cove. Rates are $165 to $220 a night, and include afternoon appetizers and wine (except Sundays), and a full breakfast. The Oak and Apple Bed & Breakfast (208 North Second Street, Oakland; 301-334-9265; www.oakandappleinn.com) is in a Victorian a short walk from the center of town. Rates are $100 to $130 a night, with full breakfast.