The Federal Housing Administration is seen to be bailed out by taxpayers as its latest monthly outlook report revealed an increase in serious delinquencies for loans insured by the agency.

This seems to pose more threat to the agency's already depleted cash reserves. The report showed that the percentage of loans in the FHA portfolio with thee missed payments or more increased to 9.3 percent in November from 8.4 percent in August.

An independent audit of the FHA's finances in November concluded that losses from mortgage defaults had consumed the agency's reserve fund to 0.24 percent, or $2.6 billion, during fiscal 2011. Congressionally-mandated agency reserve fund is 2 percent level. In 2006, before the housingdownturn, the reserve fund stood at 7%. The ratio measures the net worth of the reserve fund compared with the value of the loans FHA has insured.

In that audit, the agency's auditor warned that further home price drops could cause the FHA to eat up the remainder of its reserves, forcing it to either seek a bailout from the Treasury Department or further increase the premiums it charges borrowers. The FHA doesn't issue mortgages, but instead insures lenders against defaults.

Experts says such a bailout could cost billions.

Home prices in the US fell in October marking the sixth straight month of decline. Prices were 1.2 percent down compared with September and 3.4 percent below year ago level, according to the latest S&P/Case-Shiller 20-city index.

The home price decline was a setback as several recent reports showed positive developments in the market partivularly new home sales, existing home sales and home building. Mortgage rates are at record lows, which should be enticing buyers.

The 20-city index has fallen every month since April. Since the housing bust began in mid-2006, homes have lost nearly 33 percent of their value.

Nineteen of the 20 cities covered by the index experience price declines in October. Phoenix was the only metro that posted price increase after three months of price declines.

The Case-Shiller index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average.

Atlanta, Detroit and Minneapolis posted the biggest monthly declines. Prices in Atlanta and Las Vegas fell to their lowest points since the housing crisis began. Prices rose in Phoenix after three straight monthly declines.

New home sales rose to a seven-month high in November to an annualized rate of 315,000 in a report released by Commerce Department Friday. This was 1.6 percent above October's revised rate of 310,000 and 9.8 percent higher than November 2010's rate.

The sales rate was less than half the 700,000 new homes that economists say should be sold to sustain a healthy housing market.

The median sales price for a new home fell 3.8 percent to $214,100 last month. Compared to November last year, the median price was down 2.5 percent.

There were 158,000 homes on the market which at current sales pace would take 6 months to sell and considered the lowest in 5-1/2 years.

The median price for a new home was $214,100 in November falling 3.8 percent from last year's price.

Existing home sales rose last month as reported by the National Association of Realtors. It said in a report that sales increase 4 percent in November to a seasonally adjusted annual rate of 4.42 million.

The 2010 reported sales figure of 4.91 million was the worst in 13 years

The trade group revised its sales from 2007 to 2010 down 16.7 percent, from nearly 17.7 million to 14.7 million. Among the reasons for the lower figures, the Realtors group says: changes in the way the Census Bureau collects data, population shifts and some sales being counted twice.

On Wednesday, the National Association of Realtors (NAR) revised home sale counts back to 2007 due to flaws in their original data analysis.

The errors started in 2007 and continued to accumulate over time," said Lawrence Yun, NAR's chief economist.The accuracy of the data is important. Private companies like residential real estate developers rely on it for planning and policy makers make decisions based on it.

The Realtors consulted with government and private housing experts, including the Federal Reserve, the Department of Housing and Urban Development, the Mortgage Bankers Association, the National Association of Home Builders, mortgage giants Fannie Mae and Freddie Mac and CoreLogic, a California-based data firm that first raised doubts about the annual numbers earlier this year.

CoreLogic has estimated that the Realtors group overstated sales in 2010 by at least 15 percent.

David Crowe, chief economist for the National Association of Home Builders, said its members use existing home sales as reported by NAR as a gauge of the overall health of the housing market.

Home mortgages applications fell last week as purchase demand remained weak even with the low interest rates hoping to entice home buyers as reported in a weekly index by the Mortgage Bankers Association.

The seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, dropped 2.6 percent in the week ended Dec 16.

The MBA's seasonally adjusted index of refinancing applications fell 1.6 percent, while the index of loan requests for home purchases dipped 4.9 percent.

Even with the low interes rates to entice borrowers, mortgage applications did not increase. "Remarkably low rates are not enough, as many homeowners continue to hold back due to lack of equity in their properties, poor credit and a weak job market," Michael Fratantoni, MBA's vice president of research and economics, said in a statement.

Fixed 30-year mortgage rates averaged 4.08 percent, down 4 basis points from 4.12 percent the week before. It was the lowest rate this year, the MBA said.

The refinance share of total mortgage activity increase to 80.7 percent of applications from 79.7 percent the previous week.

The survey includes more than 75 percent of U.S. retail residential mortgage applications, according to the industry group.