Sales of previously owned homes unexpectedly declined in January for a second month, signaling that a lack of job growth is hindering the government's extension of a tax credit.

Purchases fell 7.2%, the second-largest decline ever, to an annual pace of 5.05 million, the National Association of Realtors said Friday in Washington. In December sales fell a record 16.2%.

The median sales price was unchanged from the same month last year, the real estate agents trade group said.

The federal tax incentive helped drive purchases in the second half of 2009 and its extension in November may have trouble generating as much demand in coming months.

Mounting distressed sales are making it harder to clear inventories, indicating job growth is required to sustain the recovery in the housing market.

"We were seeing payback for the first tax credit, and the second credit is not having any measurable impact on sales," Patrick Newport, a housing economist at IHS Global Insight in Lexington, Mass., said before the report came out.

"Demand for housing is really weak. Improvement in the job market is really what has to happen for homes to start selling."

The median of 70 projections from economists surveyed by Bloomberg News called for sales of existing homes to rise to a 5.5 million rate in January. Estimates ranged from 5.04 million to 6 million.

The number of previously owned unsold homes on the market fell 0.5%, to 3.27 million. At the current sales pace, it would take 7.8 months to sell those houses, compared with 7.2 months at the end of December.

The median price was $164,700 in January, the same as in January 2009, the agents' group said.

The share of homes sold to first-time buyers fell to 40% in January from 43% in December, Lawrence Yun, the group's chief economist, said in a news conference. That indicated the renewal of the tax credit in early November failed to spur increased demand, he said.

Distressed sales accounted for 38% of total homes sold, compared with 32% in December, Yun said.

The report showed sales of existing single-family homes fell 6.9%, to an annual rate of 4.43 million. Sales of condos and co-ops fell 8.1%, to a 620,000 rate.

Purchases fell in all regions, led by an 11% slump in the Northeast.

Sales fell 7.4% in the South, 6.9% in the Midwest and 5.2% in the West.

Housing began to recover in 2009 after a three-year decline. Roughly 5.16 million previously owned homes were sold last year, up from 4.91 million in 2008. But distressed sales have driven down prices.

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