Consumer confidence is at a 16-year low, says the Conference Board. Hit hard by high gas prices, lower housing prices, and rising medical and food bills, consumers had the bleakest expectations for jobs and inflation for the next 12 months since 1982.

With job prospects weaker and core inflation up nearly four percent above a year ago, according to the Labor Department, fewer folks expect to buy big-ticket items like a car or a home.

We appear to be at the walk-away price for all kinds of goods, including houses.

In 2007, the trend to use less gasoline began in earnest with more people choosing public transportation over driving their cars. Ridership for public transportation was up over two percent says the American Public Transportation Association.

By March 2008, before some states reported record $4 a gallon gas, the U.S. Department of Transportation reported the steepest decrease in driving ever recorded. Americans drove about 4.3 percent or 11 billion miles less than a year ago in March, and the Energy Information Administration says gas consumption will be 0.4 percent less than last summer.

This behavior squares with consumer pullback on buying homes, resulting in the near record collapse in housing prices reported by the Office of Federal Housing Enterprise Oversight. In Q1-08, housing prices were down over three percent, the largest decline since OFHEO began tracking the index. The purchase index showed prices falling in 43 states, a testimony to the pervasive credit crunch and fear gripping housing markets, even in economically healthy locales.

The cities showing the greatest escalation in price declines were in California and Florida, which also experienced the greatest gains during the post 9/11 housing boom.

Bucking the depreciation trend were Wyoming (prices up 6.3 percent), Utah (up 5.6 percent), Montana (up 4.9 percent), Texas (up 4.7 percent) and Alabama (up 4.5 percent).

The reason this report is sobering is that the price declines are calculated on homes purchased with conventional loans secured by Fannie Mae and Freddie Mac, government sponsored secondary market providers overseen by OFHEO.

Unlike Standard & Poor's controversial Case-Shiller Index, which shows housing down over 14 percent for the same period, OFHEO is regarded as more upbeat, since it excludes volatile jumbo and subprime loans.

Are home buyers at the walk away price?

A glimmer of hope came via the Commerce Department which says new home sales were up over 3 percent in April. That's good news, but are still trailing last year by 42 percent, or the sales pace of 1991, the last major recession.

The Energy Information Administration says gas consumption will be 0.4 percent less this summer than last. Futures prices are already coming off $130 per barrel highs.

The housing correction is in its third year. Watch for the best deals in houses between now and the end of summer.