Home prices and consumer confidence both dropped precipitously in their most recent U.S. soundings, according to figures released Tuesday.

The data are a further indication that the economic maelstrom analysts had anticipated in the United States might have already begun.

"Consumers are extremely pessimistic," said Lynn Franco, director of the Conference Board's consumer research centre.

"This news does not bode well for retailers who are already bracing for what is shaping up to be a challenging holiday season."

Scared consumers

The Conference Board said its consumer confidence index for October hit its lowest level, at 38, since the New York-based business think-tank began tracking shoppers in 1967.

The October figure was down 27 per cent from September and well below analysts' expectations of 52.

The drop represents the biggest month-over-month decline since 1973 and appears to stem from consumer sentiment regarding the ongoing global financial crisis.

Retailers already have begun cutting prices in anticipation of a difficult Christmas and are likely to cut even further in the wake of the Conference Board's indicator.

Distressed homeowners

In equally troubling data released Tuesday, Standard & Poor's Case-Shiller index of home prices in 10 U.S. cities slipped by 1.1 per cent in August compared with July and was down a record 17.7 per cent year-over-year, relative to August 2007.

Using a slightly broader calculation of 20 U.S. cities, home prices were off one per cent month-to-month and 16.6 per cent last August compared with August 2007.

Worse still, the house-price numbers are from the month prior to September's financial meltdown and could mean home values will slip even further in the coming months.

One explanation for the poorer sales performance is that, amid a widespread credit crunch, buyers have been unable to raise enough cash to purchase new units. Alternatively, panicked sellers might have decided they urgently needed to sell their homes before valuations fall further.

In support of the second explanation, the California Association of Realtors noted that home sales in the Golden State almost doubled in September compared to the same month one year earlier — despite a year-over-year drop of 40 per cent in housing prices.

Recent numbers also indicated that U.S. foreclosures jumped more than 70 per cent in the third quarter of 2008 compared to the same year earlier. RealtyTrac, which follows U.S. housing foreclosures, said the 765,000 homes that were taken back by financing companies represented a 3.5 per cent increase versus the second quarter of the year.

The Standard & Poor's housing numbers, well followed within the realty sector, paint a more dismal picture compared with recent U.S. statistics regarding the sale of new and existing homes, both of which increased unexpectedly in the most recent readings.