Naturally you would think home builders would dramatically scale back their operations until inventories had dropped and the market rebalanced. And that's your first mistake; You thought.
While builders have cut back production, they have only cut back to the historic average. Since this is a historic level of glut in the market, production will have to be cut to historic lows in order to rebalance the market. As I've suggested before, the best thing for home builders to do right now is take a vacation and not work the next year. Come back and then start building houses again. Alas, when I drive down the Streets of Minneapolis (a popular 1970's spin off that was relatively unheard of) I see new condos, town homes and twin home developments going up further condemning us to lower housing prices.
Apparently home builders just don't seem to get it.
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