Some additional encouraging news...

In an article in the sometimes under appreciated East Valley Tribune, it is noted that builders in the Valley continue to shed inventory, by selling about twice as many homes as they are pulling permits for. It is short term painful for all in our industry, whether you have land to sell, or do drywall, or are an engineer. The builders are correcting their oversupply, and October Sales new home sales, while not flashy at 3159, registered the highest number of sales in 7 months. Not a huge number, by an means, but a good solid stable number. I don't think anyone expects that November new homes sales will match october, so we might have a let down there, but overall, we can start to see where builders may be in a position of recovery if demand for new homes at newly affordable prices, I might add, hold up. The word is still out on November resales, and whether they can hold much of the momentum of a decent October.

I tend to focus on the broad home sales numbers a lot, which may not directly interest those of you interested in land sales, but it has a huge tie-in. One, this new home sales number is a great indicator whether or not builders will be buying land in the near future. The fact that they are slowing permits down means that they are also going to be slowing down buying new land to dispose of lots they already own. This is a negative obviously for our industry, as it is slowing our sales down massively. But, the light at the end of the tunnel is that the builders are making headway, and should be back on track to buy dirt as they deplete what they have. It is big ship, and it takes time to turn, but as I have said many times on this blog, the builders have pricing power, and have the ability to turn it around before the resale owners do, to a large extent. Buying new homes for reasonable prices, as opposed to resales at higher prices, is what convinces many first time homebuyers to get in the water, in my opinion. Well, the 2005 market killed that, when new home prices were driven through the roof. Builders have recognized this and are marketing homes at some pretty fair deals for consumers, and will continue to do so, until the demand catches up. There is light for our market in 2008, as long as there are no further surprises in the credit markets.