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Tucson, Arizona | Published: 05.17.2008
The number of Tucson-area new-home permits edged up in April, and a new national report showed construction of new homes increased by the biggest percentage in more than two years in April.
But except for those bright spots, the outlook remains grim, both local and national analysts said.
Tucson-area new-home sales and prices in April continued to show a slide from 2007, according to a report released Friday by local housing market analyst John Strobeck. He said he doesn't expect the market to bounce back to pre-slowdown levels for years — possibly as long as a decade.
"People want to know when we're going to back to the other market," he said. "We're not. This is our market."
New-home closings dropped to 269, down about 50 percent from a year ago and more than 10 percent from March, the Southern Arizona Housing Market Letter showed.
The number of permits pulled was 386, down 40 percent from April 2007, but up slightly from March, according to the report.
The median price for a new home dropped to $218,000, down about 10 percent from last April and down about 2 percent the previous month.
The average price from new homes also fell. It was $250,456 in April, down about 14 percent from a year ago, and down about 4 percent from March.
Strobeck, of Bright Future Business Consultants, said the slump in new home sales may continue indefinitely.
Such factors as a high inventory of homes on the market and high consumer debt are keeping the market from picking up steam, he said.
Resale homes also showed a drop in April, according to Strobeck's report. Resale closings fell about 27 percent from April 2007 to 1,111.
The median price for resale homes dropped about 10 percent to $190,000 from last year. The average price for resale homes dropped about 6 percent to $241,335, the report said.
Nationally, construction of new homes increased by the biggest percentage in more than two years in April, according to a Commerce Department report issued Friday.
That was a rare spot of good news amid the worst downturn in housing in more than two decades, but analysts played down the increase, noting that all the strength came from the volatile apartment sector.
They said the painful housing slump is far from over as a record flood of foreclosures continues to add to the sizable stockpile of unsold homes.
The Commerce Department reported Friday that housing construction rose by 8.2 percent in April to a seasonally adjusted annual rate of 1.03 million units.
Although apartment construction rose by 36 percent, building in the much larger single-family sector of the market fell by 1.7 percent, the 12th consecutive monthly decline, pushing single-family activity down to a 16-year low.
"It is definitely too early to uncork the champagne on the long and winding road to more healthy housing-market conditions," said Brian Bethune, an economist at Global Insight.
He said he did not expect housing activity to stabilize until the end of this year.
Applications for building permits, considered a good sign of future activity, recorded an increase in April, rising by 4.9 percent to 978,000 units.
It was the first gain in permits in five months, but it still left permits 20 percent below where they were a year ago.
Economists said housing construction will remain under pressure until builders have more success in reducing a huge backlog of unsold homes, a challenge amid the current economic weakness.
"The demand for new homes still is quite weak, the overhang of vacant housing units is at record proportions, consumer sentiment continues to fall and the economy has been losing jobs since the end of last year," said David Seiders, chief economist at the National Association of Home Builders.
He said the economic fundamentals point to continued weakness in the single-family market for the rest of this year.
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