Most builders are offering an array of incentives to lure buyers to subdivisions along the Wasatch Front.
It's easy to see why. Builders, reeling from a lack of buyers, took out permits for the construction of only 289 homes in March, according to data from Construction Monitor, which tracks home-building activity throughout the West. That's the latest in a recent string of "lowest levels since" in recent months, in this instance since at least March 1990, when the service began compiling permitting data in the state.
March's total is down nearly 74 percent from permits taken out for the construction 1,101 units in March 2007, Construction Monitor said.
Curtis Dowdle, executive officer of the Salt Lake Home Builders Association, said the sharp drop in home building can be viewed as a positive. He said local builders reacted quickly to the residential real estate downturn and have begun building fewer homes, instead of continuing to add them at high levels and flooding the market with additional inventory.
"As an industry, we are responding to the market and not contributing to the problem of excess inventory," Dowdle said. "The sky is not falling, we are adjusting."
Nationally, residential building permits taken out in March fell nearly 41 percent from March 2007, to an annual rate of 927,000 units, the Commerce Department said Wednesday.
U.S. housing starts in March were at a seasonally adjusted annual rate of 947,000, down 11.9 percent from February's estimate and 36.5 percent below March 2007. National home-building activity remains near two-decade lows.
Sterling Jenson, invest- ment strategist for Wells Fargo Bank in Salt Lake City, said Wednesday in his monthly economic update that the drop in activity nationwide is providing a foundation for a recovery down the road. "Fewer homes coming on should help clear the inventory" of homes for sale.
But the recovery nationally may be farther off than many had hoped. The national home-building report released by the Commerce Department on Wednesday was actually worse than most economists had forecast, a signal the beleaguered housing industry has yet to hit bottom.
Unlike Utah, where the slowdown began in earnest over the past eight months, many housing markets in other parts of the country have been in a downturn for several years. A 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 in foreclosure.
Reduced affordability also has played a role, with years of house-price increases putting homeownership out of reach of more and more families.
Wells Fargo economist Kelly Matthews on Wednesday suggested that the local market has yet to hit bottom. He forecasts a 20 percent decline in selling prices between the third quarter 2007 and the end of this year, with two-thirds of that drop coming between now and the end of the year.
lesley@sltrib.com
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* THE ASSOCIATED PRESS contributed to this article.
