7.7 percent

Decline in the nationwide Pending Home Sales Index between December 2008 and January 2009, as measured by the National Association of Realtors. The seasonally adjusted index covers signed contracts for sales of existing single-family homes. The index stands at 80.4; in 2006 it was 111.9.

The Midwest, Northeast, and South all posted index declines. But the West actually saw a 2.4 percent increase, as a wave of foreclosures drove down home prices and buyers—some perhaps foreclosure vultures—moved back into the market. In California, sales in the fourth quarter of 2008 were up 84.7 percent from a year earlier, according to the NAR, with foreclosures accounting for half of all transactions.

There's a perception that foreclosures are a necessary market correction, a notion perhaps reinforced by the recent increased sales activity in California and elsewhere. NAR spokesman Walter Molony stopped short of saying that people losing their homes is a good thing, but in an e-mail response to a Consumer Reports inquiry he wrote that "it's necessary to clear foreclosures from the data and to bring inventory down to stabilize home prices."

The foreclosure crisis has become pervasive enough—as many as 3 million more are projected for 2009, according to DefendYourDollars.org—to warrant government intervention. On March 4, the Obama administration moved forward with an ambitious plan that could prevent millions of foreclosures by creating incentives for borrowers and lenders alike. That effort and other tactics, like an $8,000 tax credit for first-time home buyers, could stabilize the housing market and boost other sectors of the economy.—Daniel DiClerico