Purchases fell 2.2 percent to an annual rate of 4.89 million, the National Association of Realtors said [on January 24] in Washington. For all of last year, sales of single-family homes declined 13 percent and prices dropped 1.8 percent, the first decrease since records began in 1968 and probably the first since the 1930s, the group said.

"Would-be homeowners are not going to jump into the market to buy new homes no matter how much prices have dropped until they get a solid feeling that prices have bottomed," said Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.

"There is likely to be little or no increase" in gross domestic product this quarter, Harvard University economist Martin Feldstein told the Senate Finance Committee in Washington today. "The probability of a recession in 2008 now exceeds 50 percent. If it occurs, it could be deeper and longer than the recessions of the recent past."

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Former U.S. Federal Reserve chairman Alan Greenspan said Thursday the odds of a U.S. recession are 50 percent or "slightly more," as he defended the risky subprime mortgages that accelerated a drop in the American housing market and subsequent economic downturn.

"The probability of recession is probably 50 percent or maybe slightly more, but we're not there yet," Greenspan told a Vancouver audience.

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“What is the probability that the U.S. economy will fall into a recession in 2008? We would answer, 65.5 percent … What we do see for 2008 is an economy teetering on the brink of recession.” Paul Kasriel, director of economic research, at Northern Trust Bank in Chicago.

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"In sum, the recent employment report strongly suggests that an official recession has arrived.” David Rosenberg, chief North American economist for Merrill Lynch.