Cancellations of purchase contracts in housing not counted by Government show massive slow down in hosing – ‘customers walking away’
Karen Gibson
Dec. 27, 2006

The sales of new homes in the U.S. rose more than forecast last month. But behind the scene the picture is different. Remember how auto manufacturers gave out the zero percent interest rates from 2001 till 2005 and created their own graveyard. That is exactly what is happening in new home market today.

The 3.4 percent increase to an annual sales pace of 1.047 million followed a rate of 1.013 million the prior month. But it mostly driven by lowering of prices and real attractive incentives by the builders to get rid of the inventory.

In reality, th number of homes completed and waiting to be sold rose 51 percent to a record 169,000 in November from the same month last year. Sales of new homes were down 16percent in November from the same month last year.

But what is most significant is the cancellations of purchase contracts in housing not counted by Government. It is growing sharply. There is even more inventory than actual inventory numbers suggest.

Homebuilders are scrambling to get rid of the inventory as the prospective buyers are canceling their purchase contracts.

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