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Existing home sales in Tucson have stabilized, but residential permits for new construction are still down, according to a mid-year economic report.

That drop means construction jobs continue to fall, dragging down the area's economic growth, said Marshall J. Vest, economist and director of the Economic Business and Research Center at the Eller College of Management.

He called a rise in residential permits in Phoenix "premature" on the part of builders and said inventory in both Phoenix and Tucson remains high.

Consumers in Arizona are "upbeat" Vest said as both wages and job growth increased in the first half of the year.

Job growth is up 3.5 percent and wages per employee up 4 percent, according to the report.

But consumers appear to be holding onto their money, Vest said as retail sales remained weak, growing at a 2-3 percent annual rate over the past five months and up only 1.6 percent in February.

"Consumers have really pulled in their horns," he said.

In contrast to the rest of the country "Tucson is in much better shape, but it's beginning to slow," Vest said of the economy.