Small Builders Sacked by Slump

Markstein said he's also seeing smaller builders turning to nontraditional sales tactics to move homes. Auctions are one way smaller players are selling homes that may be available because the original buyers have backed out of a contract.

And Markstein said when small builders are facing tough times, they can do something the big boys can't -- they can move. "I certainly have gotten calls from builders who are researching going to a new area."

The forecasts from the NAHB don't predict a national recovery getting under way until next year, when big and small builders have been able to burn off some of the excess inventory that has been pushing prices lower and forcing them to increase incentives to get buyers to commit to a new home.

"All we really want is for the fear to go out of the market," said Markstein. "Essentially, this is going to turn around when the consumer realizes that it's not going to get any worse and prices are likely going to be going up in the future."

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