In all previous recessions, sales of new homes, foreclosures homes and other existing homes jumped up and down by roughly the same proportion, according to housing economists.
But in this current recession, sales of new homes have fallen far more significantly than sales of foreclosures homes and other existing homes.
The result, according to economists, is that new homes are staying unsold in the housing market for nearly one year.
The difference in trend can also be observed in the prices. Across the U.S. and particularly in the New York regional market, sales prices for existing homes have fallen more steeply than sales prices for new homes.
This price difference, according to housing analysts, has driven the faster pace of sales of previously owned homes compared to new homes.
Based on real estate market data, out of 135,000 unsold new homes in May, almost 50 percent have been waiting in the market for one year or more as of May 31. The median length of time these unsold new homes have spent waiting on the market has reached 11.5 months, which is a first in the history of U.S. residential sales.
Some analysts contend that home builders may need to lower their prices even further down to be able to compete with low-priced existing homes. Builders, some analysts said, should have realized by now the folly of their overbuilding and speculative ventures.
Meanwhile, some housing economists contend that it is advantageous to the housing market that the sales of foreclosures homes and other previously owned homes have been overtaking new homes by a wide gap.
Many economists state that the overwhelmingly large numbers of foreclosures homes need to be cut down to a more manageable level before a housing recovery can start and before a nationwide recovery can begin.
Although housing analysts are encouraged by the rising pace of sales of foreclosures homes and other existing homes, they are now concerned about the predicted wave of foreclosures arising from the readjustment of option adjustable mortgage loans later this year and in the following years.
Aside from the option ARM problem, the country is also clobbered by rising business closures and job losses, which are now the main reasons for most of the recent foreclosures.
Lastly, economists contend that foreclosures homes and other pre-owned homes have been able to adapt to changes in housing market conditions more quickly than new homes.
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