Stock indexes retained losses after the National Association of Realtors reported its index of sales contracts on previously owned homes fell 1.9% in February to 84.6, the lowest since the gauge's inception.
"Overall housing conditions remain bleak, discouraging potential buyers," said Lehman Brothers analyst Michelle Meyer.
Off morning lows, the Dow Jones Industrial Average was more recently down 32.73 points to 12,579.78.
Of the Dow's 30 components, 18 were trading lower, with aluminum manufacturer Alcoa Inc. among the blue chips on the decline. After Monday's close, Alcoa reported a first-quarter profit drop of more than 50%. .
Alcoa's disappointing profit foreshadows a tough reporting season in which the slumping dollar, weak economy and high raw-material costs dog the Street, said Doug Sandler, chief equity officer at Riverfront Investment Group.
"Ultimately we're still in a bear market, and it's going to take some more digestion and some more sideways movement to get out," said Sandler.
The S&P 500 dropped 4.34 points to 1,368.20.
On the S&P, telecommunication services and industrials led sector declines, both down 0.8%, followed by consumer discretionary and financial shares, each off 0.6%.
Utilities and energy sectors offered mild gains, with utilities up 0.3% and energy up 0.2%.
The technology-heavy Nasdaq Composite shed 9.22 points to 2,355.61, with chipmaker Advanced Micro Devices Inc. among those weighing, its shares off 3.9%.
AMD late Monday projected revenue below what it had anticipated and said it would cut its work force by 10%. .
Also lower, shares of Apple Inc. dropped 0.2% following a downgrade to underperform from market perform by Morgan Keegan, which noted "mounting evidence of broad-based weakness in consumer technology spending in the U.S. and Europe."
Ahead of Tuesday's open, Washington Mutual Inc. projected a first-quarter loss of $1.1 billion, while entering deals to raise $7 billion.
Speculation that Washington Mutual would draw an investment of $5 billion helped U.S. stocks make modest gains on Monday.
Shares of the struggling lender were off 9%.
In commodities trading, crude-oil futures edged lower, with crude for May delivery losing $1 to $108.09 a barrel on the New York Mercantile Exchange.
Gold futures fell, with the front contract dipping $13.40 to $909.30 an ounce.
Still on deck is the release of minutes from the last Federal Reserve rate-setting meeting on March 18, when the benchmark federal funds rate was reduced by three-quarters of a percentage point. The minutes will be released at 2 p.m. Eastern.
"With the Fed in crisis-management mode, what happens next with the already-low funds rate is not important," said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co.
"The only information that would intrigue would be any ideas that the Fed indicates for crisis scenarios," he said.
By Kate Gibson