Several major pieces of economic news were released this morning, and all were good. Personal Spending rose more than expected, the fastest growth in two years. The Chicago PMI report rose more than expected as well. The Michigan Consumer Sentiment report seemed to hold its own. In addition, the core inflation number came in within the Fed's target range.

This is a major contrast to the numbers earlier in the week. Durable Goods and Consumer Confidence reports were terrible, and both Existing and New Home Sales indicated that there appears to be no end in sight for the housing slump. The only good number was Second-Quarter GDP. However, this was prior to the turmoil created in the markets by the credit crisis.

Then, why did the stock market rally on the bad news and is going down today on these positive economic reports? It's the liquidity. The stock market is driven by money and credit. As there is greater availability and lower cost, the market performs better. Who is the ultimate gatekeeper for this? You guessed it: the Federal Reserve.

Existing home sales took a dip again last month, the fifth straight month in a row, and are now running at a five-year low. It wasn't as big of a drop as many analysts had been expecting, but we did see a 0.2 percent decline, taking the annual rate of 5.75 million units.

Along with a drop in existing home sales came another drop in home prices. With the decline in prices last month, we have now seen existing home prices fall for twelve straight months in a row. The average last month dropped down to $230,200, an 0.6% drop from the same month last year.

Not all areas of the country went through further deterioration though. When the nation first started to undergo a housing slump, the effects were initially noticed in the East, now this area has been steadily improving. Last month the region saw not only rising existing home sales, but also an increase in home prices.

We see some more weakness in the housing market again today, indicating that the rough times are still not close to coming to an end anytime soon. The National Association of Realtors announced today that existing home sales fell by more than expected during the month of April.

According to today's report, existing home sales fell by 2.6%, which puts us at the lowest annual sales rate in the last four years at 5.99 million units. In reaction to the fall in home sales, we are also given data that the average price for home sales dropped in the month. This represents the ninth straight month that home prices have dropped.

Earlier this month I wrote about a release from the NAR that predicted that 2007 had the possibility of being the first year in history to show a drop in home prices. I would have to agree that we are well on our way for the first annual drop in prices. The current nine month streak of falling prices is the longest streak in history and right now no one is expecting to see this trend reverse in the near future.

April's median home price fell to $220,900 which is down 0.8% from the same month last year. According to the report earlier this month from the NAR, they are expecting that the average price for homes sold to fall down to $219,800 by the close of this year.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor'sObserver.