Builders along the Wasatch Front took out permits for the construction of 242 homes in January, the lowest level since 1990, a report by Construction Monitor shows.

January's total is down 74 percent from 937 in January 2007, said the service, which tracks building activity throughout the West.

Builders are adjusting to a record glut of newly constructed houses that remain empty, according to a second report, by Newreach, real estate research company in Salt Lake City.

In Salt Lake County in the fourth quarter, there were a record 1,037 completed-yet-unoccupied houses and condominiums, up from 340 units in the fourth quarter 2006, Newreach said.

"It's a record level, but it could be far worse" if builders had not curbed new-construction levels so quickly as the market began to sour," said Jason Eldredge of Newreach. In other areas of the country, such as Phoenix and Las Vegas, builders took longer to reduce their construction levels, which aggravated the downturn.

Curtis Dowdle, executive officer with the Salt Lake Homebuilders Association, thinks the decline in new-home construction will last through this year, but that it is unlikely to continue much longer given Utah's comparatively strong economy.

"I'm already getting anecdotal evidence from builders that there's more traffic in model homes, compared with the third and fourth quarters of '07," Dowdle said.

Even with the drop in new-home construction, though, Newreach is estimating that it will take 10 months to sell the county's inventory of new, unoccupied homes - even if no new homes were constructed during that time period.

Nationally, the Commerce Department reported Wednesday that U.S. housing starts fell nearly 28 percent, to a seasonally adjusted annual rate of 1.01 million homes and apartments in January, compared with the same month in 2007.

Unlike Utah, where the slowdown began in earnest over the past eight months, housing markets in many other parts of the country have been in a downturn for several years. One key reason for the decline is the tighter lending standards put in place last summer in the midst of the nation's subprime lending crisis, in which substantial numbers of borrowers with poor credit got home loans that ultimately ended up in foreclosure.

In Utah, reduced affordability also has played a role, with years of house-price increases putting homeownership out of reach of more and more families.

Although sales of new and existing homes along the Wasatch Front have been off since last summer, prices are still up over last year.

But sellers are making so many concessions that many in the industry are expecting prices to decline this year, compared with 2007.

Many builders, struggling to cope with the downturn, continue to offer incentives to lure buyers. At the Daybreak residential development in South Jordan, all but one builder - Richmond American - has agreed to participate in a Smart Buy program, designed to create interest among prospective buyers.

The program, which debuted in January and runs through April, offers buyers a price guarantee. If anytime between signing their contract to a buy a home and closing the base price on the model goes down, the buyer will be refunded the difference at closing.

Jennifer Hurst, director of marketing for Kennecott Land, said the program is designed in great part to address the issue buyers who are worried about falling home prices. With the Daybreak program, "you can buy now, get the lot and home you want, and have some comfort that if home prices do fall, you'll be protected."

In addition to the price guarantee, buyers who sign a contract to buy a home in the development are eligible for $1,000 in appraisal, home-repair and/or "staging" services that can help them sell a previous home.

Builders in the development also are offering more financing incentives, she said.

lesley@sltrib.com