gn:
If banks are in denial and not willing to “give away” their lands, particularly with the bailout money from the taxpayers, this transfer of lands from one builder to another at much lower price may not happen for quite some time. doesn’t this mean that the new house price will not go down for quite some time?

Banks with the bailout are much stronger than individuals. It will mean that the next major price reduction will be led by existing home sellers, not by home builders (new homes).