What's not so good for the goose may be good for the gander, as home sales continue to rock the economy, but poor recent news from home builders could benefit sellers of existing homes.

Housing starts, that metric put out by the National Association of Home Builders that means that homes are beginning construction, plunged in October to a six-year low. With starts dropping 14.6 percent, that's the lowest level since July 2000. Building permits were down 6.3 percent -- the lowest rate in nine years.

As dire as that sounds, the advantage that home builders have is that they can concentrate on eliminating standing inventory, many times by offering terrific incentives to homebuyers. When builders offer incentives, that's usually bad for existing home sellers because it's hard to compete with an all-new home with a free pool, landscaping or other upgrades thrown in.

Unlike homes that must be started, built and completed, existing homeowners can enter the market with a phone call to a broker, so having fewer new homes to compete with is desirable, especially when homebuying is sweetened with falling interest rates.

Following the home builders announcement of falling starts, mortgage rates quickly dropped to the lowest level since Jan. 25, with the average 30-year fixed rate hovering at 6.24 percent. According to Bankrate.com's weekly national survey of large lenders, bankers believe that inflation pressures may be easing. Comments from Federal Reserve Board members have recently downplayed "the likelihood of further interest rate hikes" and that helped push mortgage rates lower. However, many economists continue to believe that the FED will not lower short term interest rates in the near future.

With fixed mortgage rates are sharply lower than five months ago, when rates were near 7 percent, homebuyers have the opportunity to get into a home without as much risk if they can qualify.

Both the National Association of Realtors and the National Association of Home Builders suggest that now is a great time to buy. As the NAHB explains it, "Thanks to the concept of “leveraging,” purchasing a home is by far the best long-term investment. Leveraging means putting down a small amount of money to earn a big return.

"For example, say you use that $10,000 to purchase a $150,000 home, and the house appreciates five percent during the first year. That means after one year, the house would be worth $157,500 -- a gain of $7,500. Your annual return on your $10,000 investment would be a whopping 75 percent.

"By contrast, putting the same $10,000 in the stock market and posting a similar 5 percent gain would only net a $500 return on investment.

"And as a home owner, your savings continue to grow in two ways. Every year, a greater portion of your monthly mortgage payment goes to the principal, reducing the overall loan amount. Second, your home appreciates over time, making it one of the very best financial investments. Not only is homeownership a stepping stone to a future of financial security, it also helps to build neighborhoods and strengthen communities. It is truly the cornerstone of the American way of life, and the fulfillment of the American dream."

However, the open window may shut soon if buyers pile back into the market, scarfing up standing new home inventory as well as existing homes for sale. That could quickly reignite starts which will in turn reignite interest rates.

Meanwhile, sellers may experience a better-than-usual seasonally adjusted holiday selling season.

And that's something to say thank you for at Thanksgiving dinner this week.

Published: November 20, 2006

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.