The number of US homes sold is expected to pick up next year
Sales of previously owned homes in the US fell by 1.9% in February compared to the previous month, compounding fears of a housing market slowdown.
According to The National Association of Realtors (NAR), the number of sales contracts signed was down by 21.4% compared to February 2007.
But the industry association forecasts cheaper home loans will stimulate sales at the end of this year and into 2009.
It expects sales of existing homes to rise by 6.6% next year to 5.74 million.
"The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met," NAR's chief economist Lawrence Yun said.
The US Federal Reserve has cut interest rates to 2.25% in recent months to try to stimulate the housing market and consumer spending.
But analysts say potential home buyers remain cautious.
"The pending home sales drop clearly shows that the housing industry still faces problems," Kurt Karl, head of economic research at Swiss Re in New York, said.
"It is a buyers' market where there is no real rush to step up and buy. A lot of homes are on the market and even though they are more affordable and interest rates are down, buyers are just holding back," Mr Karl said.
NAR also forecasts a large fall in the price of new homes and the number of new properties sold this year.
It predicts sales of new properties will fall 25.7% in 2008 to 576,000. The average selling price is expected to fall 3.6% to $238,400.