The plunge in the Pending Home Sales index in November should not have been a surprise to analysts. The Mortgage Bankers Association applications index for purchase mortgages went into a tailspin in late October, as people could no longer be assured of closing by November 30th, the expiration date for the original first-time buyers tax credit. In fact, the decline is even worse than the nationwide data suggest. Sales in the Northeast and Midwest fell by 25.7 percent in November, with the figure for the Midwest setting a new low for 2009. The decline was much more moderate in the West where investors are likely buying up houses in markets where the prices have plummeted. This is good news for the West, but it suggests that the markets elsewhere in the country may see considerable downward price pressure in 2010.
--Dean Baker
