Believe it. If they don’t sell the units right now, the developers stand to lose a lot of money. It’s better to shift the loss to buyers who will pay way too much for units that will take a substantial hit over the next year or two.

The largest home prices drop in 35 years has just occurred nationally… and it’s coming to a neighborhood near you. The median price of a new home plunged in September by the largest amount in more than 35 years, even as the pace of sales rebounded for a second month.

From the Associated Press today:

The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September 2005. It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970. The weakness in new home prices was even sharper than a 2.5 percent fall in the price of existing homes last month, which had been the biggest drop on record.

The declines in prices served to underscore the severity of the correction in the once-booming housing market, which had seen sales of both new and existing homes soar to record levels for five consecutive years, propelled by the lowest mortgage rates in more than four decades.