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In yet another sign of the economic crisis, the Mortgage Bankers Association said Wednesday that mortgage applications plunged 23% last week.
The MBA said its seasonally adjusted index of mortgage application activity dropped to 455.4 in the week ended Sept. 26, down from 591.4 the prior week.
Turmoil in the banking and finance industries has resulted in a credit freeze, making it difficult for prospective homeowners to take out loans. The market is also experiencing a glut of foreclosures.
In an unprecedented move, the U.S. government in September took over the mortgage giants Fannie Mae and Freddie Mac, with a rescue plan that could inject $100 billion into each of them just to keep them afloat.
The association also reported steep declines in other weekly indexes tracking housing finance.
The refinance index plummeted 34.7% to 1333.9 from the prior week. The seasonally adjusted purchase index fell 10.9% to 304.8.
The average interest rate for 30-year fixed-rate mortgages slipped to 6.07% from 6.08%, the association said.
Wal-Mart Stores Inc., the world's largest retailer, said Wednesday it will lower the price of several toys in 3,500 stores across the U.S. ahead of a holiday season which is expected to be subdued.
Retailers across the board are expecting consumers to rein in spending this season amid rising food and gas prices, turmoil in the financial markets and a prolonged housing slump.
Wal-Mart (WMT, Fortune 500) said it will cut prices on 10 popular toys to $10 each, including certain Barbie Dolls, Play-Doh Ice Cream Shop, some Hot Wheels toys and Bakugan by Spin Master, a game many experts cite as one of the "hot" toys this year.
It will also open Christmas shops within its stores over the next 10 days, which will offer deals such as an ornament value pack for $5.
Wal-Mart said it conducted a survey that showed consumers will start Christmas shopping earlier this year and make other changes to stretch holiday dollars.
