Builders have been struggling as they try to work around tight money, and decreased demand. Alan Zibel of the Associated Press said that new home sales have sunk 33 percent to the lowest level on record. As potential buyers stopped shopping for homes once they could no longer receive government tax credits.
The federal tax credit expired on April 30th. And buyers are having to get their homes closed by June 30th. Much of the increase in home buying was from buyers taking advantage of the credit.
New-home sales in May fell from April to a seasonally adjusted annual sales of 300,000, the government said Wednesday. That was the slowest sales pace on records dating back to 1963. And it’s the largest monthly drop on record. Sales have now sunk 78 percent from their peak in July 2005.
In Houston, the hot sub-divisions such as Highland Village have many vacant lots. Three years ago it was hard to find a location to build in Highland Village, and Lynn Park. Now there are plenty of lots available where builders have leveled older homes and found no financing to build spec homes. There are even two new homes which were started and stopped. These homes have been left vacant for months and are no longer structurally sound. They will now end up being tear downs.
The end does not look like it is in sight. As most builders have way more inventory of land than they need. This will further hurt the housing market, as the builders were the buyers of vacant land.