Low Prices Changing New Home Market

The market for new homes is so weak that many builders aren’t building much of anything unless they have a signed contract.

Inventories are at 7.5 months, their lowest since 1992, according to the National Association of Home Builders.

Getting the market back to where it was before the meltdown may take years because prices continue to be so depressed by joblessness, says Mark Zandi, chief economist of Moody's Economy.com.

The new home market is likely to recover in two years, according to Jay Brinkmann, chief economist of the Mortgage Bankers Association. But even then custom homes may not be a big factor, says NAHB Chief Economist David Crowe, because prices are so low, builders won’t be able to afford to build them.

Source: The Wall Street Journal, June Fletcher (10/24/2009)