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Last Updated: Tuesday, 24 April 2007, 15:13 GMT 16:13 UK
Sharp decline in US house sales
House for sale in the US
Boom times in the housing market seem a long time ago
Sales of non-new US homes fell 8.4% in March, the sharpest month-on-month drop for 18 years and a further illustration of weakness in the US housing market.

The data, from the National Association of Realtors, also showed the number of homes sold was at a near-four year low.

The housing market has stuttered badly in recent months, raising fears about the health of the economy in general.

Confidence has been hit by problems in the sub-prime mortgage market, with many lenders under severe pressure.

Sub-prime lenders loan money to people with poor credit histories and the recent collapse of one such lender is being investigated by regulators and Congress.

Separate figures published by the Conference Board showed US consumer confidence fell last month to its lowest level since August.

'Bottoming out'

The housing market is a vital barometer of the US economy, which is expected to slow this year.

Some analysts remain worried that a sharp fall in the market, allied to weakness in manufacturing, could potentially trigger a recession.

The Fed will need to cut rates some time this year to jump-start the economy
Andrew Brenner, Man Financial

The latest figures showed an 11.3% fall in existing home sales, compared with a year ago.

About 6.1 million existing homes were traded in March, the lowest figure since June 2003, while the average price of a house is now $217,000, down 0.3% on 2006.

"In terms of home sales numbers we are in the middle of a bottoming process which is going to take us some time," said Michael Vogelzang, president of finance firm Boston Advisors.

"I think the sub-prime stuff is all tied up in the middle of this."

Rates dilemma

Policymakers have held US interest rates at 5.25% for the past six months, trying to balance fears of persistent inflation with the palpable signs of a slowdown in economic activity.

But inflation eased slightly last month, leading some analysts to call for the Federal Reserve to consider cutting rates soon.

"Simply put, these numbers are bad," Andrew Brenner, an analyst at Man Financial, said of the housing figures.

"The Fed will need to cut rates some time this year to jump-start the economy."

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