An index of sentiment among US housebuilders fell to its lowest level in more than 16 years and estate agents reported prices falling in a third of American cities.

The crisis in the sub-prime mortgage market contributed to an 11% fall in sales nationwide in the second quarter, according to the National Association of Realtors.

Many economists believe a cutback in construction needed to reduce an oversupply of new homes.

While there was a slight fall in prices across the US, many of the big falls were in Florida, where former bubble markets had double-digit declines.