Washington  - Monthly sales of existing homes dropped to their lowest level in 10 years in June as the Senate on Thursday considered a major rescue plan to shore up prices and help hundreds of thousands of homeowners still threatened with foreclosure.

Sales of previously-owned homes dropped 2.6 per cent from May to a seasonally-adjusted rate of 4.86 million units, more than 15 per cent below June 2007, the National Association of Realtors said.

The US House of Representatives approved a long-awaited bill to address the ongoing housing slump on Wednesday after US President George W Bush dropped his opposition to the legislation.

The Senate could follow suit in the coming days, paving the way for some 400,000 struggling homeowners to refinance into government- backed, low-interest loans and approving a contingency plan in the event that mortgage giants Fannie Mae and Freddie Mac face collapse.

US Treasury Secretary Henry Paulson reportedly urged the White House to drop its opposition because of the added rescue plan for Fannie Mae and Freddie Mac, which together manage nearly half of the 12-trillion-dollar US mortgage market.

The bill also provides tax incentives for first-time home buyers and offers 4 billion dollars in grants for local authorities to purchase and renovate foreclosed properties in some of the hardest- hit communities.

Home prices across the US have fallen dramatically since early 2007, sparking a record number of foreclosures by homeowners that could no longer afford to pay off their mortgages.

Banks and other financial institutions, facing billions of dollars in writedowns of mortgage-related assets, have also restricted credit access to prospective buyers, putting further pressure on the housing market. (dpa)