Last week we saw where the Commerce Department reported a dramatic decline in the construction of new single-family homes and apartments during October. Today we got a little more evidence of what is going on with housing as we hear about sales of existing homes falling in 38 states last month.

After I wrote about last week's report on new home construction, several comments came in from our readers saying how the slowdown in new home construction was just what the market needed. I agree, that less construction should help boost the ailing housing market, but that only holds true if you can keep demand flowing. Is it possible that Americans have finally had enough with their debt accumulation? I am sure the Fed is pondering that same question. Not only have we almost surely seen an end to rising interest rates, but I would not be surprised to see rates start to fall as we head into 2007 and as the Fed tries to get us back on our spending spree.

According to today's government report, the hardest hit states have been Nevada, Arizona, Florida and California. What is really interesting is that as the volume of homes sold has fallen, so have the asking prices. The report claims a reduction in the midpoint prices for existing homes sold during the summer of 1.2 percent year over year to $224,900.

Where does that take us? The way I see it, right now it will soon be a buyer's market. There just aren't the bids out there and at the same time, sellers are not willing to lower their asking prices to meet the stubborn home shoppers. It's a standoff and right now neither side is willing to budge. In order to sell their house sellers are going to have to drop their asking prices WELL beneath their market or hang in there and hope the market comes to them. I think they will be waiting a while if that is what their intentions are.