Highly discounted homes are selling at a fast pace now in the United States. Prime states like Las Vegas, California and Florida saw heavily discounted new homes selling at a fast pace. Figures showed a 2.7 percent rise over the projections of economists.
However, Zelman & Associate’s Ivy Zelman, a homebuilding analyst pointed out to Forbes.com that sale of new homes should not be taken as a metric to measure new home sales data. Investors agreed with him too.
Builders however did not benefit as the sales rose against heavy discounts offered by them. Buyer’s had to be enticed against heavy competition even as the median price dipped steeply down by 0.9 percent the lowest in the past four years.
Stock prices of real estate companies came down too with the Pulte Homes seeing a fall of 0.9 percent, Ryland group a fall of 5.3 percent and the Hovanian plunging to 13.3 percent. Though painful, slashing of home prices has become a necessity as the market had to be leveled out following the turmoil in the US housing market. With high insurance costs and expensive maintenance options, home builders do not have options other than bringing down the prices enough to generate a demand and liquidate their inventories of empty homes.
According to the Inside Mortgage Finance publisher Guy Cecala, US housing market has no chance of a recovery unless there is a huge surge in demand which can only happen if prices are slashed to the bottom. Statistics show that even at the current rate of buying, it will take at least ten months to liquidate the existing supply of unsold new properties.