Say what? But a drop in new home sales will bring a double dip in the recession, you say.
Not quite. Often you will hear that the stock market is “overbought” or “oversold”. This happens wherever there exists a market. The issue with the stock market is that adjustments either way can happen quickly and in dramatic fashion.
The recent plunge in new home sales can be seen as a good thing, as prices only begin to normalize when a bottom is reached. Whether we are there yet or not remains to be seen. The fact that while the sales are dropping, and prices are not moving further south as fast can be seen as a stabilization of the market. This isn’t much comfort to those who bought their houses at inflated prices and now have to sell them at the lower prices.
“Now is the time to buy” doesn’t really help out sellers too much, since if it is time to buy, it certainly isn’t fun to be a seller. And while all real estate is local, it seems all localities are having difficulties.
This is once again a growing pain that we’ll just have to experience as we move through recovery.