HOUSING UPDATE….Sales of new homes took a nosedive last month. By itself that’s not a big surprise, but here are the details:

On a regional basis, new home sales in the West fell 13.6% in September compared to same month last year. Sales dropped 6.6% in the Northeast, 36.6% in the Midwest and 7.9% in the South, the Commerce Department said.

Sales in the Midwest are down 36.6%? What’s up with that? I’m not surprised to see that the bursting of California’s housing bubble has knocked the wind out of sales in the West, but there’s been no bubble in the Midwest. In fact, hasn’t it been the least bubble-icious region in the country for the past few years?

Very strange. In any case, this comes a day after learning that existing home sales in California dropped 32% last month, and sales for the year are 24% below 2005 levels. Some of this is because people are taking their homes off the market rather than selling them for less than they think they’re worth, but I suspect that dam can hold only just so long. There’s a certain number of people who don’t have a choice in the matter, and eventually most of the holdouts are going to have to get back into the market.

Not looking good. Buckle your seatbelts.