The major indexes fell about 2 percent, including the Dow Jones industrial average, which lost more than 280 points.

The National Association of Realtors said sales resumed their decline in June after a slight rebound in May. Existing-home sales declined 2.6 percent in June, well beyond the 1 percent drop economists had forecast.

Investors punished shares of homebuilders and financial companies yesterday because both sectors have struggled with the declining housing market.

The Dow fell 283.10, or 2.43 percent, to 11,349.28.

The pullback erased the nearly 170 points added in the two previous sessions. Last week, the Dow gained nearly 400 points. While some declines after the latest rally would not have come as a surprise, the drop yesterday revealed fresh unease about the economy.

The Standard & Poor's 500 index fell 29.65, or 2.31 percent, to 1,252.54. A jump in Amazon.com Inc. shares helped contain some of the decline in the technology-heavy Nasdaq composite index, which fell 45.77, or 1.97 percent, to 2,280.11.

Stocks had risen in the previous two sessions as the price of oil declined. Oil is now down more than $20 after recently hitting a record above $147 a barrel. A barrel of light, sweet crude rose $1.05 yesterday to settle at $125.49 on the New York Mercantile Exchange.

Financial stocks declined again yesterday after rising sharply in the last week from their recent lows.

Washington Mutual Inc. fell 62 cents, or 13 percent, to $4.03 after dropping 20 percent Wednesday as concerns persisted about the company's mortgage portfolio. The thrift this week posted a $3 billion loss due to increases in its loss reserves to cover souring loans in its mortgage holdings.

Other financials lost ground. Citigroup Inc. fell $2.06, or 9.8 percent, to $19.06, while Merrill Lynch & Co. fell $4.77, or 14 percent, to $29.04. Wachovia Corp. declined $1.96, or 11 percent, to $15.69.

Fannie Mae and Freddie Mac fell sharply after rallying earlier in the week on legislation speeding through Congress that would grant the Treasury Department power to help the government-sponsored mortgage companies. The two together back or own $5 trillion in mortgages - nearly half the nation's total.

Fannie Mae fell $2.98, or 20 percent, to $12.02, while Freddie Mac fell $1.99, or 18 percent, to $8.81.

Homebuilder Lennar Corp. fell $2.47, or 18 percent, to $11.07 and KB Home fell $3.04, or 15 percent, to $16.70.

Amazon.com jumped $8.18, or 12 percent, to $78.72 after reporting late Wednesday that second-quarter earnings more than doubled to easily top analysts' expectations. The Internet retailer also raised its full-year revenue projections.