WASHINGTON - U.S. demand for home loans fell for a third straight week last week, while a report says prices of single-family homes dropped further in July as the housing market struggles without government support.
Loan applications to buy homes fell 3.3 percent, the Mortgage Bankers Association said Wednesday. A second report showed the Federal Housing Finance Agency's house price index dropped 0.5 percent after falling 1.2 percent in June.
The housing market, the main catalyst of the worst recession since the 1930s, has hit a soft patch after the end of a popular home-buyer tax credit in April, posing a threat to the fragile economic recovery.
While much of the housing market's weakness has been blamed on the expiration of the tax credit, analysts said stubbornly high unemployment was also sapping demand for homes.
"We fear that a more longer-lasting slide is under way. High unemployment, heavy indebtedness, and widespread negative equity are weighing on housing demand," said Paul Dales, a U.S. economist at Capital Economics in Toronto.
Last week, the Mortgage Bankers Association's index that includes both purchase and refinancing applications fell 1.4 percent. Analysts expect data later this week to show home sales bounced back from July's decline.