More gloom for US housing market

US home prices are tipped to fall further in 2008

The number of pending home sales in the US fell by 1.5% in December, official figures show, adding to evidence the housing market is still deteriorating.

The index, compiled by the National Association of Realtors, fell to its second lowest reading on record.

The data measures deals where a buyer has signed a contract but the sale is yet to be closed.

Separately the largest homebuilder in the US, DR Horton, reported a loss in the last three months of 2007.

The firm had to write off assets, including the declining value of land, as the housing slump continued to bite.

Losses hit $128.8m (£64m) compared with a profit of $109.7m in the same period a year ago.

Worry

The weakness in the US housing sector has led some analysts to fear that the economy is heading for a recession.

The National Association of Realtors now expects there will be 5.4 million home sales in 2008, down from 5.7 million in 2007.

Many analysts have predicted that prices will continue to fall in 2008 as builders struggle to sell a glut of new properties.

The worry is that falling home prices and higher mortgage repayment costs will lead to an increase in home repossessions.

This in turn could constrain US consumer spending, which in turn could cause the US economy to contract.