By Diana Olick, CNBC Real Estate Reporter
NEW YORK ( CNBC) -- Sales of newly built homes are bouncing around a bottom, but prices are now at the lowest level of the year. The median price of a new home came in at $212,300 for October, which is up from a year ago, but October of 2010 represented the big fall after the end of the home buyer tax credit. The fact that October of this year saw the lowest price of the year so far is not good news going forward. What this means for the nation's big builders has the analysts split. "While we continue to believe prices may fall slightly from current levels, we believe pricing is essentially near its trough, and therefore should result in minimal impairment charges for the builders in 2012," writes Michael Rehaut at JP Morgan.
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So will the big builders continue to slash prices in order to compete? Can they? "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