Given this situation, Mr. Hurckes said, "you have to have huge increases in remodeling in other sections of the country for remodeling stocks to benefit significantly from a soft new-home market.

A TOWN HOUSE development of 116 residences is taking shape here, reflecting the recovery of the new-home market in semirural Putnam County.

"Buyers flooded the new-home market last summer when mortgage rates started falling and as a result borrowed sales from September."

Incentives are most common in the new-home market, where builders are under financial pressure to sell empty homes and, as large businesses, have the ability to absorb the financial hit.

But Mr. Seiders said the new-home market was being supported by several factors, particularly the increasing use of adjustable-rate mortgages, which offer lower rates than fixed-rate loans.

As for the new-home market, the problem is supply, not demand, said Patrick O'Keefe, executive vice president of the New Jersey Builders Association in Plainsboro.

Builders are losing their grasp on the new-home market, which is why so many of them have responded by being more aggressive in their use of promotions to sell homes.

Once they get the experience they need I'm going to introduce them to the new-home market.

"It appears that the new-home market is steaming along," said John A. Tuccillo, an economist at the National Association of Realtors.

These stricter standards, along with rising interest rates and existing-home prices that are still stubbornly high in some places, are affecting affordability, analysts say, and further hurting the new-home market.