No quick recovery seen for housing market

With April’s new home construction starts at 1.53 million, 33.2 percent below their peak in January 2006 and 17.3 percent below what National Association of Home Builders Chief Economist David Seider says is the full-recovery level, home builders have written off hope that 2007 will be the year the market recovers from its slump, according to Bloomberg News.
The nation’s inventory of unsold homes is at its highest level since the National Association of Realtors began keeping records in 1999, and home prices have made their steepest drop since the Great Depression, the NAR said.
The future is not so bright, either, not with $650 billion of subprime loans slated to reset at higher interest rates by 2009, the NAR said. On the other hand, the Realtors said, homebuyers are starting to find better deals as builders drop prices to clear out inventory.
Larry Zacks, president of closely held Putnam County Builders Inc. in Mahopac, N.Y., said that, after putting a 3,150-square-foot house on the market in February for $799,000, he had to reduce the price to $749,000, then $699,000, then $659,000. “We finally sold it for $649,000,” he said. “Things are moving, it’s just a question of finding the right price,” Zacks added. “In a glutted market, buyers have a huge selection,so they don’t have to be forgiving. If they don’t like one thing about it, they can go down the street.”
His experience was mirrored across the country, as sales of new homes increased 16 percent in April, the highest increase since 1993, according to the U.S. Commerce Department, as the median price for a new home fell 11 percent to $229, 100.