US homes sales fall for the third straight month

US home sales fell again in February

Sales of existing US homes fell for a third straight month in February, to their lowest level since July 2009.

The figures have sparked concern that the housing market's fragile rebound could falter, undermining the recovery in the overall US economy.

Sales dropped 0.6% in February, according to the National Association of Realtors.

But Wall Street stocks rose, despite the drop, because the figures were still better than expected.

Analysts had expected a 1% fall to an annual rate of five million homes sold. The report from the realtors' association showed sales were slightly better than the forecast, falling to 5.02 million.

Housing market still weak

But the news is still raising concerns about the strength of the US housing market, which has been slow to recover since its collapse helped push the country into recession.

The average home price has dropped in the last 12 months by 1.8% to $165,000 (£109.500). Bad weather, tight lending conditions and high unemployment have been blamed for the market's poor showing.

Government support for the mortgage financiers Fannie Mae and Freddie Mac has helped keep interest rates low as part of an effort to help the housing industry recover. They have had $126bn of state money to keep them afloat.

The housing finance system clearly cannot continue to operate as it has in the past

Timothy Geithner, US Treasury Secretary

The two companies, which were taken over by the government after they nearly collapsed during the credit crisis, guarantee an estimated 70% of all US mortgages.

The Obama administration says they are badly in need of an overhaul. But giving evidence to Congress on Tuesday, Treasury Secretary Timothy Geithner said that would have to wait until "a time of greater market stability".

"The housing finance system clearly cannot continue to operate as it has in the past," Mr Geithner said. A fundamental reform was necessary, he said, with "stronger regulation, more effective consumer protections and a clearer role of government with less risk borne by the American taxpayer".

Officials will be seeking public comment next month. Mr Geithner said it would take several months to develop a plan.

But Barney Frank, chairman of the House Financial Services Committee, said while there was consensus about replacing Fannie and Freddie, there was little agreement on what should take their place.

"You can't really tear down the old jail until you've built a new one," he said.