The report showed home prices were down 5 percent from year-ago levels, the biggest year-over-year decline since June 1991, just after the 1990-91 recession ended.
Not surprisingly, separate data Tuesday from the Conference Board showed consumer confidence tumbled for a third straight month in October, reaching a two-year low.
"Further weakening in business conditions has, yet again, tempered consumers' assessment of current-day conditions and may very well be a prelude to lackluster job growth in the months ahead," said Lynn Franco, director of the Conference Board's consumer research center.
GDP Data Due
During the two-day meeting, in which the Fed may also resume a discussion on potential changes to their communications policy, officials will get a reading on third-quarter economic growth, which should at least assure them that a precipitous decline in activity has not taken
Economists surveyed by Reuters predict that gross domestic product figures Wednesday morning will show the economy expanded at a 3 percent annual rate in the third quarter. That
will be only a moderate easing from the 3.8 percent growth in the second quarter, although a steeper slowing is expected in the final three months of the year.
The expected fourth-quarter softness puts a burden on Fed Chairman Ben Bernanke and his colleagues to meet their test of sustaining a noninflationary expansion at time when a housing
downturn and credit-market strains are weighing heavily.
In a speech on Oct. 19, Bernanke said that during times of stress, policy-makers must be prepared to counter uncertainty by acting boldly with measures to ward off a worse situation.
"Intuition suggests that stronger action by the central bank may be warranted to prevent particularly costly outcomes," Bernanke said -- words that would echo the thoughts of many of
those on Wall Street.