Houses Getting Cheaper

Much cheaper, it seems: “Housing developers are drastically cutting prices to move a backlog of unsold homes off the market, according to new statistics released today by the Commerce Department. The median sale price of a new home in September 2006 was $217,000, 9.7 percent lower than in September 2005, the report said — the steepest year-to-year drop in more than three decades.”

Is that a nominal number or a real one? At any rate, sales went way up and inventories declined as a result of the reduced prices, so that doesn’t sound to me quite like the tailspin of doom some were foreseeing but the Commerce Department still has a fairly large number of unsold homes (6+ months worth) lying around, so we haven’t seen the end of things yet. But how big a proportion of the market are new homes anyway?