Sales of newly built U.S. single-family homes fell unexpectedly in December as the bounce from an initial tax credit fizzled, the latest sign that the government-led housing recovery might be losing some steam, Reuters reported. The government report on Wednesday followed a report showing a plunge last month in sales of previously owned homes and a continued decline in sentiment among homebuilders, which could bode ill for the broader recovery from the worst U.S. recession since the Great Depression of the 1930s. New home sales fell 7.6 percent to a 342,000 unit annual rate last month from an upwardly revised 370,000 unit pace in November. It was the second straight month that new home sales had fallen. Markets had expected a 370,000 unit annual pace from November's previously reported 355,000 unit rate. "The figures add to recent evidence that the recovery in the housing market will falter once the fiscal support is removed," said Paul Dales, U.S. economist at Capital Economics in Toronto. The Federal Reserve on Wednesday left overnight U.S. lending rates near zero as expected and repeated its pledge to keep them low for an extended period. However, the Fed -- the U.S. central bank -- dropped from its policy statement a reference to improvement in the housing market and reiterated plans to end purchases of mortgage-backed securities in March. The program had depressed mortgage rates, contributing to the housing market's healing in recent months. U.S. stocks extended losses on the Fed statement, while prices for government debt held at higher levels. The dollar added to gains against the euro. New home sales for the whole of 2009 slumped 22.9 percent to a record low 374,000 units, the Commerce Department said. A separate report showed mortgage applications fell for the first time in a month last week as demand for home refinancing loans dropped sharply. Demand for loans to buy a home also fell, but on a smaller scale, the Mortgage Bankers Association said. Its index of mortgage applications fell 10.9 percent to 513.0 in the week ended Jan. 22.
