Housing Market Index In Downward Spiral

A downward spiral is no overstatement for the housing market index. After taking a sudden 8 point plunge in November, the index fell another 4 points to a 56 level for December that is well below Econoday's low estimate.

Sales growth continues to slow, at 61 for both current sales and 6-month sales and still above breakeven 50 but down about a dozen points over the last two months. And traffic continues to outright contract, down 2 points and further below 50 at 43.

By region, the Northeast has the lowest composite score, at 37, with the other three regions above 50 and led by the West at a very strong and unchanged level of 65.

The West, which is a focused region for home builders, appears to be holding up this sample which otherwise is reporting a sudden break in strength. Mortgage rates have stabilized the last few weeks but still remain high compared to recent years, averaging about 5 percent for 30-year fixed mortgages. Watch tomorrow for housing starts and building permits which have been slumping and which aren't expected to show any new strength.