Sales of existing homes plunged in March by the largest amount in nearly two decades, reflecting bad weather and increasing problems in the subprime mortgage market, a real estate trade group reported today.

The National Association of Realtors reported that sales of existing homes fell by 8.4 percent in March, compared with February. It was the biggest one-month decline since a 12.6 percent drop in January 1989, another period of recession conditions in housing. The drop left sales in March at a seasonally adjusted annual rate of 6.12 million units, the slowest pace since June 2003.

The steep sales decline was accompanied by an eighth straight fall in median home prices, the longest such period of falling prices on record. The median price fell to $217,000, a drop of 0.3 percent from the price a year ago.

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Jeffrey Taylor and his wife bought their dream home in Purcellville for $538,000 last August. Now they have to sell it because they are getting divorced and neither one can afford the mortgage alone.

The most they could get for it was $430,000. After paying all the real estate commissions and taxes, they will still owe the bank $118,000.

“Five months later, I lose $100,000,” said Taylor, a high school teacher. “I don’t think I can take $100,000 into the stock market and lose it faster.”

Such a scenario, known as a short sale, was unthinkable during the real estate boom of recent years. In the course of five months, a person could buy and sell a property and walk away with tens of thousands of dollars. Now, instead of receiving large checks at the settlement table, many sellers are writing them.

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WASHINGTON: Amid new signs that the housing slump is worsening, Senate Democrats are saying that hundreds of millions of dollars of new federal aid may be needed to assist homeowners at risk of foreclosure.

The call Wednesday for federal involvement from Charles Shumer, a Democrat from New York and chairman of the Joint Economic Committee, came on the same day the National Association of Realtors issued a forecast that the median price for existing homes would decline for the first time since 1968 as a sales slump worsens.

“We will be proposing significant amounts of dollars,” Schumer told reporters after being asked if a large federal bailout might be needed.

“We’ve heard one heartbreaking story after another of borrowers with limited incomes being sold mortgages they could not afford,” Senator Sherrod Brown, a Democrat from Ohio, said at a briefing on Capitol Hill.

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