The meltdown in the mortgage market caused the biggest drop on record in July for pending home sales, taking the index down to the lowest level since the month that included the Sept. 11, 2001 terrorist attack.Now I really do think we will be headed into a recession very soon. The housing market has been what has propelled the economy for the past few years as homes prices skyrocketed.
The National Association of Realtors' pending home sales index, which measures contracts to buy existing homes, fell 12.2 percent to a reading of 89.9.
It is the second lowest reading on record for the seven-year-old index, trailing only the 89.8 reading in September 2001. Economists had been looking for only about a 2 percent decline in the latest reading.
"There's bad reports and then there are truly awful ones. This is clearly the latter," said Mike Larson, real estate analyst for independent research firm Weiss Research. "Even I'm shocked by a 12 percent decline."
This report is just the latest in a long string of reports that shows our housing market is collapsing around us. If this trend does not stop look for foreclosures to be even worse than expected. Also look for layoffs in construction and industries that rely on a vibrant housing market. The worst is yet to come and this could not be worse news for the Republicans.