So will the big builders continue to slash prices in order to compete?
"Commodity prices remain elevated, and that doesn't give builders much room to cut prices too much without really sacrificing profit margins again," says Peter Boockvar at Miller Tabak.
That's why analysts are being very selective in their approach to the home builders and are "muting" their outlooks for 2012."This is shaping up to be the worst year on record for the single-family housing market," says Patrick Newport at IHS Global Insight. "New home sales (data start in 1963), single-family housing starts (data start in 1959) and single-family permits (data starts in 1960) will all set record lows in 2011. Existing home sales may avoid the cellar, but only because a third of them are selling at "distressed" prices." So what will get housing back on a strong foundation for growth? All the analysts agree: job growth. -- Written by Diana Olick, CNBC Real Estate Reporter