Utah home sales feverish
Warm weather lures buyers; state bucks nationwide trend
By JEFF DEMOSS
Standard-Examiner staff jdemoss@standard.net

   Despite a sharp decline nationally in sales of new homes last month, Utah continues to have one of the best-performing markets in the country, with rapidly rising prices and robust sales through February.
   “It’s as good as I’ve ever seen it,” said Joe Adair, vice president of Century 21 Adair Realtors in Riverdale. “It seems like there’s not enough new homes out there.
   “Our phones are still ringing off the hook with calls from buyers.”
   The Commerce Department reported Monday that sales of new single-family homes fell by 3.9 percent nationally last month to a seasonally adjusted annual rate of 848,000, the slowest sales pace in nearly seven years. All regions of the country except the West experienced weakness last month.
   Utah’s booming economy has helped the local housing market stay afloat among a nationwide slowing trend and problems with sub prime mortgage lenders, said Randy Benoit, associate broker with Prudential Utah Real Estate in Layton.
   “I don’t feel anything will really change the Utah market at this point, with record low unemployment and strong inmigration,” Benoit said. “We will lose some buyers from the pool because of changes in the subprime market, but that situation will just be a speed bump.”
   He said 20 percent to 25 percent of Utah homebuyers go for subprime loans, which allow people with blemished credit records to obtain mortgages at higher interest rates.
   Utah had the highest appreciation rate in home prices among all states at the end of 2006, followed by Idaho, according to a report earlier this month from the Office of Federal Housing Enterprise Oversight.
   Unseasonably warm weather and later sunsets have attracted a new wave of buyers in March after relatively flat sales in the first two months of 2007, Adair said.
   “I wouldn’t say we’ve exceeded last year because January and February were slower,” he said, “but the month of March has been a lot busier.”
   The February decline nationwide followed an even larger 15.8 percent drop in sales in January, which had been the largest one-month plunge in 13 years. The back to-back declines provided evidence that the housing market is struggling with lagging demand and a glut of unsold homes.
   The weakness in sales pushed the median price of a new home down to $250,000 in February, a drop of 0.3 percent from a year ago. It marked the second straight month that the median price fell compared with the same period a year ago. The median is the point where half the homes sold for more and half for less.
   By region of the country, sales were up 24.6 percent in the West, a rebound after a 25.8 percent plunge in January.
   However, every other region showed weakness last month, led by a 26.8 percent drop in sales in the Northeast and a 20 percent decline in the Midwest, two areas that experienced a series of winter storms. Sales also fell in the South, dropping by 7 percent.
   The performance of new home sales was in contrast to a report last week that sales of existing homes rose in February by the largest amount in nearly three years.
   Analysts had expected new home sales to increase in February, based on a view that January’s steep plunge had overstated the weakness in housing.
   The back-to-back declines in the new home market served to support the forecasts of private analysts who believe the slowdown in housing has more months to run its course.
   The housing bust is coming after a housing boom in which sales of both new and existing homes set records for five straight years.
   Some analysts see the current slowdown as a correction from a period of speculative frenzy in which investors were buying second homes in hopes of reselling them quickly to make profits.
   The sales decline over the past year has left a glut of unsold homes on the market, forcing builders to slash prices and offer incentives.
   For February, the number of unsold homes rose by 1.5 percent to 546,000. That meant it would take 8.1 months to sell all of those homes at the February sales pace, up from 7.3 months in January.
   The plunge in housing has trimmed overall economic growth and is occurring as part of an effort by the Federal Reserve to raise interest rates as a way of slowing economic activity and keeping inflation under control.
   The Associated Press contributed to this article.