New Home Building Shows Life

Author:	Lucas Jones
Source:	Homes Discovered
Date:	January 2, 2007

New home building, which has been one of the weakest sectors of the American economy, has shown some signs of life recently with a strong month of November.  New home sales exceeded the forecasted rate of sale by a good margin during the month.  Previously, the median price of homes sold showed declines throughout the fall because there were so many homes available on the Oakland market.  The supply of new homes for sale continued to get larger and even set a new record in Berkely. The pace of new home sales is down considerably from the ridiculous sales rate of a year ago but is up from the slump we saw in July.  Even with this good news for sellers, there is more bad news.  There is still a major weakness in the home market.  There is way too much inventory on the market and not nearly enough demand.  When these two factors are much more closer then we will see home prices, and sales, increase.  This good news from the month of November, however, does show that the market is beginning to stabilize a bit. None of this spells a price increase.  All the news coming from builders and realtors says they are still offering incentive and price breaks in some form of another.  The homebuilding slowdown is a real drag on the economy.  Most large builders have earnings below forecasts and new forecasts show continued decline for the foreseeable future.

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