In addition to its usual economic forecasts, the report spotlighted defining moments of the 2006 market. Those that should interest residential homebuyers and sellers include:
- US Census Bureau inventories of new homes have begun to decline: down to a 5.9-month supply at year's end (compared to 7.2 months in July). However, keep in mind that these figures on new home sales are recorded at the point that sale contracts are signed. If a contract is cancelled, it is neither reflected in revised figures nor do these units return to inventory. (Cancellations were running as high as 30% last fall.)
- Excess inventories may continue to weigh on home prices over the long term and sellers are only reluctantly lowering prices as they slowly recognize the new reality of a buyers market.
- Single family starts in December 2006 were off 30% from their peak, but sales of new and existing homes were down 18% and 14% respectively. The decrease in new homes on the market may eventually -- maybe over as much as a year -- ease the inventory glut.
* Source: Mortgagenewsdaily.com
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