I don't know what's going on here, but here are some things I suspect:
GRE takers - the report is that there is a big drop in the number of students taking the GRE last June. But what about in October? Some of the decline could be because students in China and India have figured out that they'll do better if they take the later test. We need to know if the numbers are also down for that test date.
There are other possibilities too. A decline would be seen if the bottom tier of students have figured out that they're wasting their time and money taking the GRE. Then there's the change from the multiple-choice analytical test to the essay-based writing test; this could deter some potential applicants. The number of students taking the GRE more than once could have declined once students figured out that schools have access to both sets of scores. And the number of GRE takers could have dropped due to crackdowns on GRE fraud in the PRC; this was widely rumored a few years ago.
Applications Applications≠applicants, and the desirability of a US education is most accurately reflected in applicants, where a student applying to 6 schools counts the same as a student who applies to 4 schools. For example, if international students have figured out that they are wasting their time applying to schools that don't can't support foreign students, then that might reduce the number of applications per student. Applications could also go down if there is better counseling for the lower tier of applicants.
I'm also not sure whether the number of applications can be measured accurately. The report is likely to be based on ETS reporting how many schools a student asks for their scores to be sent to. We will look at a student's application based on a self-reported GRE score and only ask for the official score if we're seriously interested. I suspect other schools do the same..."preapplication" systems will reduce the number of applications.