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It's only anecdotal but I live in a golfing community in central NJ and within 3 blocks of my home there are presently 16 homes in various stages of construction. The reason IMO is the developer (Lennar) has slashed prices tremendously and people are reacting. WE only moved in in Feb and we enjoyed almost an $88,000 reduction (about 17%) off previous prices which until mid 2007 were not being discounted at all in this community.

As soon as the masses trying to sell their present homes wake up to the reality their place isn't worth what they think it's worth but only what someone will pay them for it, the next housing market cycle will begin. Also, given the depth of this housing pull back I expect when the market turns it will climb sharply due to the "compressed spring" phenomenon that says when a market is pushed down sharply and quickly the rebound is just as quick. And while I do not expect housing prices to immediately climb to 2004-5 levels I do believe they will be much higher in 2 years then they are today.

I don't think there has ever been a better time to buy a new home then now with prices heavily discounted and mortgage rates as low as they are.