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Home prices fell again in November. Like everything else reported about the economy recently, the drop was at a "record pace"

In the case of housing, The Standard & Poor’s/Case-Shiller 20-city housing index plunged by a record 18.2% from November 2007

The housing catastrophe has gone beyond hampering the ability of people to sell homes. With each month that passes it further robs consumers of their sense of well-being. A homeowner with a $300,000 house and $150,000 mortgage might spend some money on the goods and services that kept the economy running. The easy take on the practice is people got into credit trouble by doing just that and tapping home equity. The practice took consumer debt to an unreasonable level and the recession had it source.

The more complex and more troubling part about the numbers is that even if people do begin to save money, they cannot fill up the holes that falling home values create. Economists have said that any money the average American earns beyond his most basic expenses goes to savings or debt repayment. Once Americans have saved enough money, they will feel safe beginning to spend again.

If home prices continue to drop, people will never be able to save enough, at least not until the economy bottoms and home prices become more stable.

Falling home values become a geometric curse on consumer activity. People with mortgages can now see the debt they have and the debt they can imagine. The debt they can imagine comes due the day that they lose a job or default on a mortgage.

For years the home was a wallet. It has moved from that status to becoming a new liability which gives millions of Americans night sweats.

Douglas A. McIntyre