Inquiring minds are looking that the new year has brought little cheer to new-home builders. Sales for new homes fell a shocking 11.2% between December and January and 18.6% from 12 months earlier:
The total number of new homes sold in January was a seasonally adjusted 284,000, down from 325,000 in December, the government said Thursday.
In total, the market is down 80% from its peak, which was set in July 2005, when the annualized rate of sales hit nearly 1.4 million.
The big problem facing developers is that they face significant competition from foreclosed homes, which sell at bargain-basement prices. In fact, 26% of all homes sold last year were foreclosures.
The numbers speak for themselves. It is hard to compete with foreclosures when they can be bought for less than the price for building.
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