Ahead of the Bell: Existing Home Sales

The National Association of Realtors' monthly report on sales of existing homes in the U.S. is projected to show a drop in sales of 5.5 percent to a seasonally adjusted annual rate of 5.2 million units, according to the consensus forecast of Wall Street economists surveyed by Thomson/IFR.

Sales of existing homes, which make up about 85 percent of the residential real estate market, fell 12.8 percent below year-ago levels in August to an annual rate of 5.5 million units, the lowest point in five years.

If the consensus forecast of for September is accurate, existing home sales would be 16.5 percent below last year's levels.

Rising mortgage defaults, especially among subprime borrowers with weak credit, and home foreclosures have led lenders to tighten credit standards, making it harder for potential buyers to get home loans and reducing demand for housing.

The percentage of subprime loans that were 60 or more days delinquent or in foreclosure rose to nearly 19 percent in July, the most recent month available, according to San Francisco-based First American LoanPerformance. Delinquency rates on other types of loans, while far lower, have also been trending upward.

Last week, big banks Wachovia Corp., Bank of America Corp. and Citigroup Inc. reported a sharp drop in third-quarter earnings, citing this summer's credit market troubles that started out in the mortgage market and spread to other types of debt.