The Arizona Republic. "The stalled housing market is hitting builders in their wallets. Revenue and profits are down, and slower sales and canceled deals are pressuring builders. They've responded with layoffs and by unloading or revaluing land they bought in the housing boom."

"Most of the big builders have operations in Arizona, and the Phoenix area has been a key market. Among them, Scottsdale-based Meritage Homes. Meritage also reported a third-quarter slide Wednesday. Cancellations hit an all-time high of 37 percent. Meritage also is adjusting its land position and rebidding construction contracts. The company had layoffs in some markets."

"The latest new-home data from analyst RL Brown shows a market seeking, but not yet finding, a bottom. There were 2,281 new-home permits issued in the Valley in September, off nearly 53 percent from the same month last year and the lowest monthly total since December of 2001."

"'We're bumping along the bottom,' he said. 'The builders are kicking it in the tail, marketing their inventory. When you cut a $195,000 house down to $118,500, that attracts buyers.'"

From USA Today. "Builders, with no emotional attachment to their homes, have become one of the biggest financial threats to individual sellers. Faced with a huge number of cancellations, builders began trying to lure buyers with eye-catching deals, such as free vacations, media rooms and landscaping."

"That's what's hurting Bryan Rauch. In January, he bought a home in Anthem, Ariz., where Pulte Homes is offering a slew of incentives. 'The plan was to renovate it and flip it,' says Rauch."

"He put the home back on the market in February, at $284,000, then lowered the price repeatedly until he hit $270,000. Still no buyers. After six months, he rented it out at a $500-a-month loss. 'The problem is the builder is giving away homes,' Rauch says. 'Properties like this are now selling for the low $200s.'"

"But Rauch needs to cut his losses. So he's putting the home back on the market at $260,000 and crossing his fingers, like a lot of other sellers around the country."

"In the softest real estate markets, sellers are waking up to the harsh reality that they can't get anywhere near what their neighbors sold their homes for last year. So they're grudgingly reducing their asking prices and offering to pay closing costs."

"At the same time, many buyers, emboldened by the transformed market, are low-balling sellers and getting deals they couldn't have imagined last year. In 2004, Sevan Derderian bought a house in Las Vegas as an investment for $281,000. He found tenants, but he kicked them out after 10 months because their rent was always late."

"'I found that it's really hard to be a landlord from a state or two away,' says Derderian, a salesman in Los Angeles. He held onto the property for another year, hoping prices would keep going up. Once the market turned south, though, he panicked."

"He listed the house in the summer for $305,000. Having owned real estate only during boom years, he assumed it would sell in about a week. After a month, he cut the price to $289,900. Another week went by. He offered to pay nearly $9,000 toward a buyer's closing costs."

"Then along came Reggie Johnson, who snapped up the house and boasts, 'I got a great deal.' Derderian, meantime, lost about $25,000 from paying the mortgage on an empty home."

"That's a risk confronting sellers in 56 metro areas, including Las Vegas, San Diego, Phoenix, New York and Miami, that are expected to suffer annual price drops, according to a study this month by Moody's Economy.com."

"'It was surprising just how quickly the market seemed to turn,' says Mark Zandi, chief economist for Economy.com. 'It was like, boom, boom, bust. It was like, 'What happened?' The psychology in the marketplace unraveled very rapidly.'"