Homebuilders, beseiged by losses on rapidly depreciating land and record levels of inventory, are unloading unsold homes at firesale prices.

According to the Commerce Department, sales of new homes bounced 4.7% in February to an annualized pace of 337,000 from 322,000 in January. Prices slipped 18% from a year ago. Median prices now stand just over $200,000, the lowest level since — gasp! — 2003.

And while the data provided a ray of hope for builders around the country, sales are still down 41% since last year. Inventory, however, is gradually being worked off, as buyers snap up new homes at what they perceive to be great deals. The supply of new homes now sits at 12.1 months, down from 12.9 months in January.

New home sales make up just 10% of total transactions, but are considered an important barometer measuring builder activity and thus, future supply. As long as builders are still dealing with their existing inventory, and as prices to continue to fall, new construction is delayed. On the whole, this is a good thing for the economy, even though it depresses current activity since jobs and production lag as builders sit around not doing anything.

The longer builders wait, the more time the market is given to chew through unsold inventory, building a stronger base for an eventual recovery.

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