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Breaking news from MarketWatch: ‘U.S. home builders have slashed their prices by a record amount, but sales still plunged by 8.5% to a 17-year low in March, the Commerce Department estimated Thursday ... the supply of homes on the market rose to 11 months, the most in 27 years....
‘Inventories are likely understated as well because of canceled sales contracts.’
From the New York Times: ‘Sales of new homes in March plummeted to the lowest level since the housing recession of the 1990s, the government said on Thursday, as inventories rose to the highest point in more than a quarter century.’
The spin you hear from the real estate industry is that falling prices will attract new buyers. It is just as likely the opposite is happening right now: falling prices are scaring buyers. Again from the N.Y. Times: ‘Prices continue to fall as well, which could discourage would-be buyers from entering the market. The median price of a new home dropped in March to $227,600, down 13.3% from a year ago.’
Analysis: This is a pretty big economic problem. Home-building is at a standstill because of the inventory glut. It doesn’t make sense to build homes if you can’t sell them.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Catalist Homes