The faltering housing market has delivered a harsh blow to the economic recovery.
A new report shows home sales fell 27 percent in July - the steepest one-month drop since figures were first compiled in 1968.
The gloomy economic picture has the White House and a top Republican leader trading barbs over current U.S. economic policy.
Phil Kerpen, the policy director for Americans for Prosperity, talks about how the economy could impact mid-term elections in November, as well as the state of mind of the voters, on CBN Newschannel's Morning program. Click play to watch, following this report.
The housing market has been in trouble for a while. Economists said it's just one more sign of the rapidly weakening economy.
"I don't think we've ever seen a drop of this magnitude," said Yale University's Robert Schiller.
The American economy has many problems. Some 4 million homes are now on the market, enough to satisfy demand for over a year.
Unemployment has stalled to 9.5 percent. And tax credits for homebuyers are running out. Retail sales have also been disappointing.
However, the White House insists the economy is improving.
"The president is doing everything that we think is appropriate to continue moving the economy in the right direction," White House Deputy Press Secretary Bill Burton said.
Republicans are hoping to capitalize on the gloomy news.
In a speech on Tuesday, House Minority Leader John Boehner, R-Ohio, said President Barack Obama should fire his key economic advisers, saying their policies are killing jobs and creating uncertainty.
"President Obama should ask for, and accept, the resignations of the remaining members of his economic team, starting with Secretary Geithner and Larry Summers, the head of the National Economic Council."
Boehner also wants the president to work with Republicans to renew the tax cuts created by former President George W. Bush.
"We tried 19 months of government as community organizer and it hasn't worked," he added, taking a dig at Obama's prior political experience. "Our fresh start needs to begin now."
The White House quickly rejected the call and responded by saying Republicans led the country to financial disaster and would wind up hurting taxpayers even more.
"We've seen this movie before, Mr. Boehner," Vice President Joe Biden responded. "We've seen it before and we know how it ends. The American people deserve something different and something better."
At this point, Americans are frustrated. Polls show that a majority disapprove of the president's handling of the economy and say Republicans aren't doing any better at it.
Meanwhile, with the midterm elections drawing near, Democrats find themselves with few options for reviving the faltering recovery.