(Bloomberg) -- China’s home prices dropped for the first time this year in June, underscoring mounting challenges to prop up a key engine of the economy. 

New-home prices in 70 cities, excluding state-subsidized housing, fell 0.06% last month from May, when they climbed 0.1%, National Bureau of Statistics figures showed Saturday. Prices declined 0.44% in the secondary market, according to the data. 

China’s real estate downturn is stifling a recovery in the world’s second-largest economy, fueling expectations for the government to take more steps to revive demand. Home sales resumed declines in June following a brief rebound earlier this year, adding to pressure on debt-laden developers and appetite for resources such as iron ore.  

To rekindle the market, regulators are expected to come up with more supportive policies. People familiar with the matter said in June that China is considering a new basket of measures, such as reducing down payments in some non-core neighborhoods of major cities, lowering agent commissions on transactions and further relaxing restrictions for residential purchases.

Authorities last week extended relief measures for developers in what was considered a modest step. Financial regulators urged banks to ease terms for property companies by encouraging negotiations to extend outstanding loans, mainly to ensure the delivery of homes that are under construction.

“Property easing measures have slowed in the second quarter,” Chen Wenjing, associate research director at China Index Holdings, said before the figures were released. “Whether regulators will support the real estate sector as a ‘stabilizer’ to the economy depends on whether the broader economy loses steam more than expected.”

The central bank signaled on Friday that more targeted support may be on the cards. The People’s Bank of China said some policies that were rolled out when the home market was overheated can be “optimized marginally,” given that supply and demand in China’s home market has shown “profound changes.”

Renewed concerns about the property sector have increased pressure in China’s credit market. Declines in high-yield dollar bonds accelerated this month amid debt worries involving major builders Sino-Ocean Group Holding Ltd. and Country Garden Holdings Co. Meanwhile, two smaller peers in late June failed to make bond payments.

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