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Sales of existing homes in the U.S. fell last month to the lowest level in at least nine years, signaling the housing slump is deepening and will weigh on growth in 2008.

Resales declined 0.4 percent, less than forecast, to an annual rate of 4.89 million from a revised 4.91 million in December that was higher than previously reported, the National Association of Realtors said today in Washington. The group began record-keeping for this measure in 1999.

Mounting foreclosures are adding to a glut of unsold homes that is driving down property values. Would-be homebuyers may be waiting for even lower prices, keeping the housing market depressed for a third year and dragging the economy close to a recession.

“The declines have been smaller than they previously were, but I think we're still on the way down,'' Nigel Gault, director of U.S. research at Global Insight Inc. in Lexington, Massachusetts, said in an interview. “Prices are going to have to keep going down if we're going to work off the supply.''

Economists had forecast home resales would fall 1.8 percent to an annual rate of 4.8 million, according to the median of 63 estimates in a Bloomberg News survey. Estimates ranged from 4.65 million to 5 million.

The number of homes for sale at the end of January rose 5.5 percent to 4.2 million. At the reported sales pace, that represents 10.3 months' supply, compared with 9.7 months in December.

U.S. Treasury securities were lower after the report. The benchmark 10-year note yielded 3.86 percent as of 10:21 a.m. in New York, up 5 basis points from Feb. 22. Stocks were higher.

`Soft, But Stable'

“The past five months' sales activity has been very soft, but stable,'' said Lawrence Yun, the real-estate agents group's chief economist. A fiscal stimulus that included tax cuts and relaxed restrictions on so-called jumbo mortgage loans may lead to better sales late this year, he said.

Elevated inventories are driving down prices and causing some potential buyers to stay on the sideline to see if prices will go down further.

The median sales price fell 4.6 percent to $201,100 from January 2007. The median cost of a single-family home decreased 5.1 percent to $198,700, while that of condominiums and co-ops fell 1 percent to $220,400.

Resales fell in three of four regions, led by a 3.6 percent drop in the Northeast. They declined 2.1 percent in the West and 0.5 percent in the South. Sales were 3.4 percent higher in the Midwest paydayloans.

Single-Family Sales

Sales of single-family homes increased 0.5 percent to a 4.34 million pace from a 10-year low in December, according to today's report. Sales of condos and co-ops fell 6.5 percent to an annual rate of 550,000.

Housing “is going to be subdued'' until inventories are reduced, Federal Reserve Bank of Minneapolis President Gary Stern told reporters Feb. 19 after a speech in Golden Valley, Minnesota.

The effects of the worst housing recession in 25 years have spread into other areas of the economy. The Federal Reserve Bank of Philadelphia's general economic index fell this month to minus 24, the weakest reading in seven years.

Economists surveyed by Bloomberg News earlier this month put the chance of the U.S. entering a recession at 50-50, up from 40 percent odds a month earlier. The Federal Reserve last week said it lowered its growth forecast and now expects the economy to expand 1.3 percent to 2 percent in the fourth quarter from the same period of 2007, compared with the 1.8 percent to 2.5 percent it projected in October.

New-Home Sales

The Commerce Department is scheduled to release the January report on new home sales on Feb. 27. While economists expect that figure to decline, some measures indicate demand for new home sales may be near the bottom.

For example, confidence among U.S. homebuilders rose for a second straight month in February and companies said there were more prospective buyers touring properties, the National Association of Homebuilders said on Feb. 19. In addition, the Reuters/University of Michigan index of consumer sentiment showed a record number of Americans said lower home prices made home buying conditions favorable.

“We're seeing prices now that are basically back to '02, '03 levels,'' Ara Hovnanian, Chief Executive Officer of Hovnanian Enterprises Inc., said in a Bloomberg Television interview on Feb. 21. “That begins to get compelling for customers.''

Even so, the housing market “continues to be in a very difficult position right now,'' and weaker sales are cutting into builders' profits, Hovnanian said.

Lowe's Cos., the world's second-largest home-improvement retailer, forecast full-year earnings less than analysts' projections after reporting a drop in sales and profits in the fourth quarter.

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