Italy housing market plunges as recession bites

ROME Dec 12 (Reuters) - Italy's housing market sank in the second quarter of this year, with home sales posting their steepest drop since 2008 and mortgages plunging by more than 40 percent in a steep economic recession, data showed on Wednesday.

Home sales were down 23.6 percent from the same period last year, national statistics institute ISTAT reported, while sales of commercial property such as shops and offices fell 24.8 percent.

Loans for house buying were in "free fall", ISTAT said, with the number of mortgages and other forms of financing agreed down 41.2 percent over the same period.

The figures chime with other grim economic data in the euro zone't third largest economy, which has been in recession since the middle of 2011.

Consumer spending, hit by high unemployment and tax hikes, is falling at its steepest rate since World War Two and gross domestic product is expected to shrink by more than 2 percent this year and post another, smaller contraction in 2013.

(Reporting by Gavin Jones; Editing by Andrew Heavens)