Existing home sales, which make up 90% of the U.S. housing market, dropped 3.3% in October and prices plunged 11.3%, the biggest drop since the National Association of Realtors group began collecting data in 1968. Over 10 months of unsold housing inventory clogs the housing pipeline, and that's not including homes slated for foreclosure.
The large number of homes unable to sale, plus the number of homes facing foreclosure only add to the already shaky housing market. These figures show us that the credit squeeze is taking a serious bite out of the housing market and may even be forcing otherwise financially healthy homeowners into foreclosure.
Many homeowners who see financial trouble on the horizon attempt to sell their home before foreclosure becomes imminent. But when the housing market is so tight that it takes 10 months to a year to sell a home, homeowners who would otherwise be financially stable, may face foreclosure because they can't continue to pay the mortgage and they're unable to sale the property.