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US housing woes 'far from over' US housing woes 'far from over'
(about 1 hour later)
The full impact of financial market turmoil "has yet to play out", a top US official has said.The full impact of financial market turmoil "has yet to play out", a top US official has said.
Treasury undersecretary for domestic finance Robert Steel said that the upheaval caused by housing market troubles was far from over.Treasury undersecretary for domestic finance Robert Steel said that the upheaval caused by housing market troubles was far from over.
His comments came as contracts for future US home sales fell to a six-year low in July, highlighting continuing weakness in the US housing market. His comments came as the US Beige Book report showed housing activity had been hurt in most of the country, showing continuing weakness in the market.
The data sent the Dow Jones index down by more than 1%. Other data showed future US home sales fell to a six-year low in July.
The data sent the Dow Jones index down by about 1.4% in late trading
Mr Steel was speaking at a Senate hearing into how people may be hit by market turbulence.Mr Steel was speaking at a Senate hearing into how people may be hit by market turbulence.
'Ultimate impact''Ultimate impact'
Last week President George W Bush set out plans to help people with sub-prime mortgages meet their payments and avoid losing their homes.Last week President George W Bush set out plans to help people with sub-prime mortgages meet their payments and avoid losing their homes.
The ultimate impact of these events on the economy is yet to play out Robert Steel, Treasury undersecretary
They included making it easier for some people with good credit ratings who have fallen behind with repayments to refinance their loans.They included making it easier for some people with good credit ratings who have fallen behind with repayments to refinance their loans.
However the Democrats are expected to expand the proposals as anxiety among Americans grows.However the Democrats are expected to expand the proposals as anxiety among Americans grows.
The deterioration in the sub-prime mortgage market, resulting in a wave of foreclosures, has triggered global stock market instability.The deterioration in the sub-prime mortgage market, resulting in a wave of foreclosures, has triggered global stock market instability.
It has also heaped pressure on the US Federal Reserve to reduce interest rates, making life easier for companies and homeowners, when it meets later this month.It has also heaped pressure on the US Federal Reserve to reduce interest rates, making life easier for companies and homeowners, when it meets later this month.
"This process is far from over," Mr Steel told the committee."This process is far from over," Mr Steel told the committee.
"The ultimate impact of these events on the economy is yet to play out.""The ultimate impact of these events on the economy is yet to play out."
Beige Book signal 'Slowing growth'
The National Association of Realtors' index of pending home sales, a tally of sales expected in the next two months, hit its lowest level since 2001. The Beige Book report said that outside of real estate, the turmoil had only a limited affect on the US economy.
Reports from the 12 Federal Reserve districts indicated that economic activity continued to expand in the 17 July to 27 August period when the survey took place.
However the pace of growth was described as moderate, modest, mixed or slowing.
In separate data the National Association of Realtors' index of pending home sales, a tally of sales expected in the next two months, hit its lowest level since 2001.
The figure was down 12.2% on the month before and 16.1% lower than July 2006.The figure was down 12.2% on the month before and 16.1% lower than July 2006.
The industry body said the fall was partly due to mortgages falling through because of the current credit squeeze.The industry body said the fall was partly due to mortgages falling through because of the current credit squeeze.
But it emphasised that the problems were concentrated in the sub-prime loan market, where loans are offered to those with patchy credit histories.But it emphasised that the problems were concentrated in the sub-prime loan market, where loans are offered to those with patchy credit histories.
It added that the majority of prospective homebuyers had not encountered any problems.It added that the majority of prospective homebuyers had not encountered any problems.
Our members are telling us some sales contracts are not closing because mortgage commitments have been falling through at the last moment Lawrence Yun, National Association of RealtorsOur members are telling us some sales contracts are not closing because mortgage commitments have been falling through at the last moment Lawrence Yun, National Association of Realtors
Analysts are looking to the Fed's Beige Book, a gauge of regional economic trends published later on Wednesday, to provide further evidence on the current economic situation.Analysts are looking to the Fed's Beige Book, a gauge of regional economic trends published later on Wednesday, to provide further evidence on the current economic situation.
The NAR said the latest sales figures for previously owned homes, which were weaker than analysts had predicted, suggested lenders were taking a tougher stance on home loans.The NAR said the latest sales figures for previously owned homes, which were weaker than analysts had predicted, suggested lenders were taking a tougher stance on home loans.
"Our members are telling us some sales contracts are not closing because mortgage commitments have been falling through at the last moment," said Lawrence Yun, the Association's chief economist."Our members are telling us some sales contracts are not closing because mortgage commitments have been falling through at the last moment," said Lawrence Yun, the Association's chief economist.
Wall Street suffered losses in early trading, with the benchmark Dow Jones index dropping more than 150 points.Wall Street suffered losses in early trading, with the benchmark Dow Jones index dropping more than 150 points.
This followed the OECD's decision to revise downwards US growth forecasts for the rest of 2007, citing the economic fallout from the housing slump.This followed the OECD's decision to revise downwards US growth forecasts for the rest of 2007, citing the economic fallout from the housing slump.