Sales of previously owned U.S. homes unexpectedly declined even as falling prices made them more affordable, signaling that the housing slump is further from a bottom than previously estimated.

Purchases fell 5.3 percent to an annual rate of 4.49 million, the fewest since 1997, the National Association of Realtors said today in Washington. The median price dropped 15 percent from a year ago to a six-year low of $170,300. Distressed properties accounted for 45 percent of all sales.

“This is actually a very disappointing set of numbers,” Ethan Harris, co-head of economic research at Barclays Capital Inc., said in a Bloomberg Television interview. “We’re still in this phase of the recession where it’s really kind of a dramatic pulling back” in purchases of big-ticket items, due to a “tremendous loss of confidence in the economy.”

Americans may have been waiting for details of President Barack Obama’s plans aimed at stemming foreclosures and declining home values that are at the core of the economic slump, the NAR said today. The report sent stocks lower, with the S&P500 Stock Index heading for its seventh decline in eight days. It was at 753.24 at 10:48 a.m. in New York.

(Bloomberg.com)