The US housing recession deepened last month as demand fell to a record low and the value of Americans’ homes slid amid tightening lending conditions. Financial Times

Sales of existing homes showed the largest fall since records began with a drop of 8% in September to an annual level of 5m, the National Association of Realtors said.

The surprisingly steep drop in demand suggests the housing market is entering its worst phase on record and underlines the risk to economic growth from falling home prices and declining activity in the sector.

The decline was significantly greater than economists expected and drove bond yields lower as investors priced in a greater likelihood of interest rate cuts by the Fed.