Home Sales, Durables Orders Probably Fell: U.S. Economy Preview (Bob Willis)

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July 20 (Bloomberg) -- Home sales in the United States probably declined in June as the housing slump headed for a third year, undermining the economy and prompting businesses and consumers to trim spending, economists said before reports this week.

Combined sales of new and existing homes dropped 1.3 percent last month, according to the median estimate of economists surveyed by Bloomberg News. Orders for durable goods, products meant to last several years, probably fell 0.3 percent.

The biggest housing recession in a generation, now being exacerbated by a tightening in credit as financial losses spread, threatens to stall economic growth. The surge in raw-material costs and slowing demand will likely prompt companies to keep reducing investment in a bid to protect profits.

``Stress in financial markets and curtailment in lending are going to make it more difficult to buy homes,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. ``Manufacturers that produce for homebuilders or homeowners are being hurt by the slump in housing.''