March 24 (Bloomberg) -- Sales of existing houses in the U.S. probably fell in February to the lowest level in at least nine years, economists said ahead of a private report today.

Purchases dropped 0.8 percent to an annual rate of 4.85 million, according to the median of 63 forecasts in a Bloomberg News survey. That would be the fewest since the National Association of Realtors began keeping records in 1999.

The real estate slump will persist as a glut of houses on the market depresses property values and lenders toughen mortgage requirements to stem credit losses. The Federal Reserve last week said the outlook had worsened and pledged to do whatever was needed to keep the economy growing.

``We expect both purchasing activity and pricing to fall for the remainder of the year,'' said Joseph Brusuelas, chief U.S. economist at IDEAglobal Inc. in New York.

The National Association of Realtors is scheduled to issue its report at 10 a.m. in Washington. Estimates in the Bloomberg News survey showed sales rates ranging from 4.69 million to 4.9 million.

The ``deepening of the housing contraction'' was one factor Fed policy makers last week said was likely to hurt growth in coming months. On March 18, the central bank cut its main lending rate by three-quarters of a percentage point to 2.25 percent and said recent reports have shown the outlook for the economy has ``weakened further.''

Fed Action

The Fed has cut its benchmark interest rate by 3 percentage points since September and enacted other measures to try to keep the economy afloat. On March 16, it reduced the rate on direct loans to banks and said it will provide up to $30 billion to JPMorgan Chase & Co. to help finance the purchase of Bear Stearns Cos. after a run on that securities firm.

Other government agencies are also struggling to limit the damage in housing. The Office of Federal Housing Oversight lowered the capital requirement on Fannie Mae and Freddie Mac to 20 percent from 30 percent last week. The initiative may immediately pump $200 billion into the mortgage market.

The goal is to ``help restart the housing engine that powers our economy,'' Fannie Mae Chief Executive Officer Daniel Mudd said at a March 19 news conference in Washington.

Housing has been a drag on growth for the past two years and the fallout has spread throughout the economy. Payrolls at U.S. employers last month fell by the most in five years, consumer spending has stalled and manufacturing has contracted.

Recession Call

Harvard University economist Martin Feldstein said this month that he believed a recession was under way and it could be the most severe since World War II. Feldstein is a member of the National Bureau of Economic Research's committee that officially declares when a recession has started.

Homebuilders have said they're still suffering. Hovnanian Enterprises Inc., New Jersey's biggest homebuilder, this month reached an agreement with banks on new lending terms after falling sales made it harder to generate cash. The company also reported its sixth straight quarterly loss.

``The market's too challenging to make accurate forecasts for fiscal '08,'' Chief Executive Officer Ara Hovnanian said on a March 11 conference call with analysts.

                        Bloomberg Survey

================================================================
                             Exist
                             Homes
                              Mlns
================================================================

Date of Release              03/24
Observation Period            Feb.
----------------------------------------------------------------
Median                        4.85
Average                       4.84
High Forecast                 4.90
Low Forecast                  4.69
Number of Participants          63
Previous                      4.89
----------------------------------------------------------------
4CAST Ltd.                    4.80
Action Economics              4.88
Aletti Gestielle SGR          4.72
Analytical Synthesis          4.69
Argus Research Corp.          4.85
Banc of America Securitie     4.75
Bank of Tokyo- Mitsubishi     4.85
Bantleon Bank AG              4.84
Barclays Capital              4.85
BBVA                          4.70
BMO Capital Markets           4.84
BNP Paribas                   4.82
Briefing.com                  4.85
Calyon                        4.86
CIBC World Markets            4.80
ClearView Economics           4.80
Collineo Asset Mgmt           4.80
Commerzbank AG                4.86
Credit Suisse                 4.87
Daiwa Securities America      4.80
Danske Bank                   4.86
DekaBank                      4.85
Desjardins Group              4.85
Deutsche Bank Securities      4.85
Dresdner Kleinwort            4.85
DZ Bank                       4.85
First Trust Advisors          4.88
Fortis                        4.90
FTN Financial                 4.85
Global Insight Inc.           4.84
Goldman, Sachs & Co.          4.89
H&R Block Financial Advis     4.85
Helaba                        4.84
HSBC Markets                  4.85
IDEAglobal                    4.77
Informa Global Markets        4.87
ING Financial Markets         4.82
Insight Economics             4.80
Intesa-SanPaulo               4.85
J.P. Morgan Chase             4.85
JPMorgan Private Client       4.85
Lehman Brothers               4.82
Lloyds TSB                    4.85
Merrill Lynch                 4.85
Moody's Economy.com           4.86
Morgan Stanley & Co.          4.88
National Bank Financial       4.85
Natixis                       4.80
PNC Bank                      4.85
RBS Greenwich Capital         4.85
Ried, Thunberg & Co.          4.89
Scotia Capital                4.86
Societe Generale              4.90
Stone & McCarthy Research     4.87
Thomson Financial/IFR         4.83
UBS Securities LLC            4.87
Unicredit MIB                 4.75
University of Maryland        4.85
Wachovia Corp.                4.82
Wells Fargo & Co.             4.84
WestLB AG                     4.80
Westpac Banking Co.           4.85
Wrightson Associates          4.89
================================================================

To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

Last Updated: March 24, 2008 00:01 EDT