The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan dropped 19 percent to 444.8 in the week ended June 26 from 548.2 the prior week. The group's refinancing gauge declined 30 percent to the lowest in seven months, while the index of purchases fell 4.5 percent.

Unemployment, which touched a 26-year high in May, and rising borrowing costs discouraged homeowners from refinancing, while a growing number of foreclosures sidelined potential buyers waiting for house prices to stop tumbling. Pending home sales showing contracts signed in May rose 0.1 percent, compared with a gain of 6.7 percent in April, the National Realtors Association said today.

"The run-up in mortgage rates is exacting a toll in terms of depressing mortgage applications," Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts, said in an interview. "The economy is in a phase of attempting to find a bottom. Anything that comes in the way of that, like higher rates, is going to mean it takes longer."

The 6,000-square-foot Los Angeles estate is being sold by the Ennis House Foundation, which recently completed the initial phase of a stabilization and restoration project following years of decay and damage from earthquakes and torrential rains. In March 2005, it was placed on the National Trust for Historic Preservation's most-endangered list.

"Our goal has always been to be a good steward of the house," said the foundation's president, James DeMeo.

"We've made a lot of progress, but at this point a private owner with the right vision and sufficient resources can better preserve the house than we can as a small nonprofit," he said, explaining the decision to place the historic home on the market.

Perched atop a hill in the Los Feliz area of Los Angeles just south of Griffith Park, the Mayan-inspired estate built in 1924 from some 27,000 16-inch concrete blocks is one of only four of the legendary American architect's "textile block" homes.

The company said it plans to step up efforts to improve its distribution network by introducing more "rapid deployment centers" and more marketing campaigns targeting Hispanic communities. Home Depot said its supply chain was not the best and had more room for improvement.

"We are playing a bit of catch-up," a company executive told the analyst meeting.

From appointing more bilingual staff to making items easier to locate in aisles, Home Depot plans a renewed focus on customer service at its stores.

Home Depot said its strategic initiatives and a revival of the home improvement market will allow it to achieve an operating margin of about 10 percent and a return on invested capital of about 15 percent.

U.S. home values posted a year-over-year decline of 14.2 percent to a Zillow Home Value Index of $182,378, resulting in a total 21.8 percent drop since the market peaked in 2006, according to Zillow's first-quarter Real Estate Market Reports, which encompass 161 metropolitan areas and cover the value changes in all homes, not just homes that have recently sold.

U.S. homes lost $704 billion in value during the first quarter and have depreciated $3.8 trillion in the past 12 months, according to analysis of the reports.

Declining home values left 21.9 percent of all American homeowners with negative equity by the end of the first quarter, Zillow said.

By comparison, 17.6 percent of all homeowners owed more on their mortgage than their property was worth in the fourth quarter of 2008, and 14.3 percent were underwater in the third quarter of last year, the reports showed.

Economists polled by Reuters had forecast home resales to slip to a 4.70 million-unit pace from a revised 4.71 million for February, which was initially reported as 4.72 million.

The inventory of existing homes for sale fell to 3.74 million from the 3.80 million overstock reported for February. The median national home price rose 4.2 percent to $175,200 from February, boosted by seasonal factors. However, prices fell 12.4 percent compared to the same period a year ago.

The Tampa Tribune, owned by Media General Inc., and 100 newspapers published by Community Newspaper Holdings Inc. are scheduled to add the Zillow search engine and other site content to their Web sites' real estate sections beginning Wednesday, Zillow said.

Once visitors enter a city, address or similar search term into the Zillow search box, their Web browser will connect them to a version of the Zillow site - co-branded with the newspaper - where they can comb through their search results, find local market data and other real estate content.

In all, 180 newspapers, including the Richmond Times-Dispatch and Winston-Salem Journal, plan to update their Web sites over the next few months to include the real estate search features, Zillow said.

The French chateau-style mansion has 56,500 square feet of space on more than 4.6 acres and is the largest home in Los Angeles County. Among the neighbors are the Los Angeles Country Club and, not too far away, the Playboy Mansion. Spelling's late husband produced hit shows such as "Charlie's Angels," "Dynasty" and "Beverly Hills 90210." He died in 2006.

"Everything there is glamorous, and is luxurious and it's really great scale," said Sally Forster Jones, an agent with Coldwell Banker Previews International in Los Angeles, which is co-listing the property. "There really is nothing to compare it to."

Prime residential properties in London were placed second on the list, despite seeing a sharp fall last year. Properties in Manhattan were the third most expensive.

The index showed that just under 50% of the locations featured managed to record positive price growth on an annual basis in 2008, although by the final quarter of last year price growth had either stalled or fallen in 75% of locations.

The biggest drops in prime city residential property prices last year, according to the index, were Hong Kong and the so-called Home Counties of England – the suburban areas around London.

The estate was built by Texan billionaire David Saperstein and features 15 bedrooms, a 50-seat cinema, staff quarters for 10, a nine-car garage and a private jogging track.

Carey, who is married to actor-singer Nick Cannon, spent three months house hunting in Los Angeles, according to Contact Music.

Although the asking price is $125 million, Carey's actual offer has not been revealed.

Work began on 583,000 homes at an annual rate, a 22 percent increase from January that was propelled by a surge in condominiums, apartments and townhouses, Commerce Department figures in Washington showed today. A separate report showed gains in producer prices slowed, underscoring a lack of inflationary pressures with the economy in a recession.

"It's a bit too early to get too excited, but we are nearing the bottom in housing," said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis, who had forecast an increase in starts.