Home builders continue their retreat

by Catherine Reagor - Dec. 17, 2008 12:00 AM
The Arizona Republic

Home building continues to slow across metropolitan Phoenix. Only 295 new-home permits were issued Valley-wide last month, according to an early count by RL Brown's Phoenix Housing Market Letter.

Lenders continue to resell foreclosure homes for bargain prices, which is making it difficult for builders to sell new houses for a profit. Almost 50 percent of all the Valley's resales last month were foreclosure homes selling for 20 to 30 percent less than regular resales.

Housing analyst RL Brown said another reason for the continued slowdown in building is there are still as many as 5,000 speculatively built homes sitting unsold in the Phoenix area. He said it's tough to get an accurate count because some builders aren't disclosing their figures.

Many of the publicly traded builders have a few hundred spec homes sitting empty in the Valley. Some built houses in anticipation of more first-timers and winter visitors purchasing homes now.

New-home closings also fell in November. That tally will be out later this month.

Home-building permits have been steadily falling since last summer. In August, the number of new permits fell to about 1,100, the lowest level since the last real-estate-led recession in 1990.

Brown said though it's painful for the industry, builders need to pull back, as they currently are, until more spec homes are sold and the foreclosure inventory drops.

Arizonan on task force

Arizona Department of Financial Institutions Superintendent Felecia Rotellini has been appointed to a task force that will examine the nation's financial-regulatory system.

The Conference of State Bank Supervisors has pulled together a group to look into any moves made by Congress to regulate the industry. Besides Rotellini, regulators from California, New Jersey and North Carolina are on the task force.