Thursday, February 08, 2007

Update On Pace of New Consruction Homes In Orlando

The pace of new-home construction continued to slow in Central Florida during the fourth quarter, with housing starts falling 37 percent from the same period a year ago, a new survey found.

Metrostudy, which tracks the new-home market, said work started on 5,281 single-family homes in the final three months of last year, down from 8,443 in the same period a year earlier and 6,853 in the third quarter of last year.

The quick contraction in housing starts "should help bring the supply of new homes into balance during the next few quarters," said Anthony Crocco, director of Metrostudy's Central Florida and Northeast divisions. "The construction pipeline is going to drop dramatically," he said.

The region's inventory of new homes declined nearly 10 percent at the end of last year, to 19,808 units, or a 7.7-month supply. The "finished, vacant" category doubled, to 8,867 units, while the number of homes under construction dropped 40 percent to 10,129 as builders cut back their work schedules in reaction to slumping demand.

Metrostudy physically drives through subdivisions to measure what it defines as new-home "closings," so it can spot evidence that an individual or family has actually moved into a dwelling. That differs from the usual industry definition of a "closing," or sale, Crocco said, because many times a sale will go through but the home won't be occupied for months. Sometimes the home quickly ends up as a still-empty "resale," competing against the builders' other new homes.

Home closings in the Orlando area fell 14 percent in the fourth quarter to 8,056 units compared with a year earlier, Metrostudy found. For the full year, the number of single-family closings was down 5 percent to 30,699 compared with all of 2005.

One interesting sign of continued demand in the region, Crocco said, was that the number of people moving into new homes was just as strong during the final quarter of the year as during the year's previous quarters. That's impressive, he said, because the October through December period is generally not the time of year during which families take possession of a home and move.

"So the fact that we had as many people moving in at the end of the year as during July, August and September says a lot. That shows there's still strong demand," Crocco said.

He also cited the ongoing job growth and a low unemployment rate in Metro Orlando -- Orange, Seminole, Osceola and Lake counties -- as good signs for a housing rebound later this year or early in 2008.

Still, the industry has plenty of challenges, he said.

"Contract cancellations are still high," he said, and competition from the huge inventory of used homes for sale remains a barrier to any rebound for builders.

For its Central Florida report, the company's survey of subdivisions includes the four Metro Orlando counties as well as parts of Polk and Volusia counties. Courtesy of Orlando Sentinel 2/7/07.