US home sales 'see 25-year low'

Sales of existing US homes fell by 12.8% last year, the biggest annual decline in 25 years, said the country's main estate agency body.

In the latest snapshot of the US housing slump, the National Association of Realtors (NAR) also said average prices declined by 1.4% in 2007.

The fall in prices accelerated towards the end of the year, with prices declining 6% in December, said NAR.

Its figures come two days after the Federal Reserve slashed interest rates.

The Fed cut interest rates to 3.5% from 4.25% on Tuesday, its biggest reduction in 25 years, as it aims to prevent the US economy falling into recession.

US-wide

The housing market has been at the centre of the slowdown in the US economy, with record mortgage defaults triggering billion-dollar losses at many of the country's biggest banks.

This in turn caused the global credit squeeze, as much of this bad mortgage debt was repacked into wider debt offerings and resold around the world.

As a result, banks worldwide have been much less willing or able to lend to each other, companies or individuals.

NAR said sales were down in all parts of the US.

Its latest figures also come as the US government and Congress are close to agreeing a fast-track plan to boost the American economy.

They are expected to announce a package of tax rebates and other incentives.

Analysts said the NAR data was not as bad as many feared.

"Housing is in such a crisis state, some were looking for an even weaker number," said Kim Rupert of Global Fixed Income Analysis.