Unfortunately for them, home builders are paying a heavy price for overbuilding, building too far away from city centers, and building the wrong products for the population.

Homebuilders flocked to Florida, Las Vegas and southern California, knowing full well that non-occupying home buyers were artificially fueling demand. At the height of the housing boom, builders were building two million homes a year despite household formation and obsolete replacement inventory needed at half that rate.

To buy cheap land, builders went further and further from core business centers, but that couldn't last either. Foreclosures among overstretched homebuyers have turned many suburbs into crime-ridden ghost towns. And the ones that are staying are being squeezed by high gas prices and traffic-congested commutes. They're not selling because they can't compete with unsold builder inventory.

And then there's the McMansion factor. Home builders are still turning out too many gargantuan single-family homes. They still think the nuclear family household is in charge, while virtually ignoring demand for growing numbers of households of aging boomers, singles, and non-traditional families with no children.

Since 2006, there are more single heads of households than marrieds. More singles and non-traditional families are buying homes than ever, yet we keep churning out McMansions, tiny condos and overpriced townhomes.

Square footage has doubled since 1950, despite households getting smaller by one whole human being. Does every child really need his or her own bathroom? Aren't there some life lessons to be learned from sharing?

The result is that we have over record-high 11-month inventories of homes for sale, and growing. Rampant fear is keeping buyers on the sidelines -- if the suburbs aren't working, what's next?

A lot of what's happening isn't the builders' fault, but they're in the best position to pay for excesses of bankers, investors, and starry-eyed, but credit-challenged homebuyers.

Why? They're the only ones who can cut back on inventory.

Banks can't because foreclosures are growing, putting pricing pressure on other homeowners as well as builders.

"Falling house prices, growing household income and receding mortgage rates have substantially boosted standard measures of housing affordability from the lows of 2006," says David Seiders, chief economist for the National Association of Home Builders. "But home sales are being held down largely by consumer expectations of further price declines and by tightening of non-rate mortgage lending standards."

Not surprisingly, housing starts were at the lowest levels in May in 17 years, and permits for future construction were also down.

The nation's builders are building the fewest homes since 1991, and we're still on an annual pace of 975,000 new homes in 2008.

That's still more than we need and more than the market wants.