"What happens here, stays here" is W a slogan used to attract tourists to Las Vegas. Sadly, it is not true of the state of the city's housing market. In September, they were 31.3% lower than a year ago, according to an s&p/Case-Shiller index of American house prices, and Vegas's problems are now spreading all over the world. According to our house-price indicators (see chart), America's housing market is leading the way down for the 20 countries covered. But the situation is even worse than it appears. Compared with the second quarter, prices fell in 11 of the 16 countries for which third-quarter data are available. Research suggests that a long, global slump lies-ahead.rnIn America, the collapse is striking bothrnfor its severity and its breadth: home prices fell in every city covered by Case-Shiller's 20-city composite index in September. On a more positive note, America's Mortgage Bankers Association said on December 3rd that home-loan applications, which are an early indication of demand for housing, surged at the end of November. This followed a fall in long-term rates after the Federal Reserve pledged to buy up to $500 billion of mortgage-backed securities issued by government-sponsored entities such as Fannie Mae and Freddie Mac, and $100 billion of their debt. However, many such loan applications are turned down, especially in tough economic times.
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