UPDATE 1-Slower sales hit Saudi Dar al-Arkan's Q2 profit

* Slower housing units sales hit earnings

* Sales in previous quarter were boosted by Mecca project

(Adds details, background)

RIYADH, July 11 (Reuters) - Dar al-Arkan Real Estate Development Co 4300.SE, Saudi Arabia's largest developer by market value, said second-quarter profit fell 10.1 percent after a drop in sales of housing units.

The company's shares fell 2.4 percent in early trade, underperforming the benchmark, which was almost flat by 0822 GMT.

Second-quarter earnings amounted to 618.3 million riyals ($164.9 million), the company said in a statement on the bourse website.

Quarterly housing sales were lower compared with last year's figures, which had been boosted by a housing project in Mecca. It did not give figures.

Operating profit fell by 14.6 percent to 668.2 million riyals, the firm said.

Earnings per share were 0.97 riyals in the first six months after 1.06 riyals in the same period a year ago. It did not give quarterly share earnings.

Last week, Dar Al-Arkan said it would raise around 6.16 billion riyals through issuing bonus shares to help finance expansion to take advantage of a growing gap between demand and supply. [ID:nL8477355]

Saudi Arabia needs 1 million new houses by 2014 to meet rising demand, HSBC said in a report last month.

The company said in May it had concluded the issue of an Islamic bond worth 750 million riyals to help fund growth and projects. [ID:nLG211166] (Reporting by Ulf Laessing, editing by Anthony Barker)