Wednesday, August 26, 2009

New Homes For Sale At 16 Year Low

WASH POST -- Builders have made huge strides in whittling away at the over supply of homes, which is key to regaining their footing in the market. The builders have instituted dramatic cutbacks in home construction, either voluntarily or because they were forced to after their financing was cut off. The end result is that the raw number of new homes for sale at the end of July was 271,000, the lowest reading since March 1993 (see chart above).

MP: The new homes for sale at the end of July (271,000) is less than half of the peak levels in 2007, and are even below the average since 1963 of 329,300. One more sign of a significant correction in the real estate market, and further evidence that the recession is ending.


At 8/26/2009 7:17 PM, Blogger Cabodog said...

Any builder that starts a home these days will loose money. Some builders are building anyway, just to generate cash flow from selling the land underneath the finished houses. To build now and expect a profit is a fallacy.

Existing homes are priced under the cost of replacement -- this simple fact means that real estate is priced too low. Once the existing (huge) inventory is purchased and occupied, we'll start to see upward price momentum due to the absence of new construction. Simple supply and demand.

At 10/05/2009 3:20 PM, Anonymous Sandy said...

Cabodog has a good point. The current low amount of new houses on sale will drive the price upward, eventually.


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