The price of previously owned homes in the US fell in October by the biggest amount in at least 40 years and the volume of sales also dropped, in a sign of the still mounting problems in the housing market.

The median price of existing homes fell by 11.3% in October to $183,300 (€142,100, £121,200) compared with a year before, the National Association of Realtors reported yesterday – the largest annual drop since records began in 1968.

The slump in prices is partly driven by a large number of distressed sales of homes or sales out of foreclosure, which typically sell at a much lower price.

Sharply falling prices will contribute to deteriorating consumer confidence and spending as the shoppers head into what is widely expected to be a dismal holiday season for retailers.

Financial Times