With the current state of the market, a glut of unsold homes, prices not coming down fast enough to entice buyers and lenders and the building of new homes out-pacing demand means only one thing can happen – slashing prices.

It seems that is what is happening. As Calculated Risk picked up in this article on Business Week, home builders are starting to cut price significantly, sometimes with 6 digits.

The point is, will it be enough to shock the market into facing reality that nothing moves until the affordability ratio goes back in favor of buyers? It seems to be the only logical course of action. Home builders are stuck with a high inventory of unsold homes and land parcels. They are still building far too many new homes than demand can absorb. Some have started to slash prices. Will this be enough to wake up the market to seriously slash price and help the economy recover sooner? We’ll see.