In August, contracts to acquire previously owned US homes slumped its third straight month. Last week, fewer Americans had filed new claims for jobless benefits. This showed a conflicting signal regarding the health of the US economy.

Last Thursday, another report on the country's economy showed a troubling decline in consumer prices in the second quarter. The data on home sales and jobless claims gave the Federal Reserve a challenge. The US central bank had been looking to see more evidence that the US economy had gained momentum before it scaled back into a bond-buying stimulus plan.

Last week, the Fed had flagged an increase in the interest rates which was seen as threat to the US economy. The central bank also said that employment and inflation had remained too weak.

A decrease of 1.6% was seen last month on sales of previously owned homes. This was according to the National Association of Realtors based on its Pending Homes Sales Index. The decline in sales signaled a sharp rise in mortgage rates which had put a significant dent in the US housing market recovery.