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Report Says Bay Area Builders Are Constructing Fewer Homes

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By SHANNON BEHNKEN, The Tampa Tribune

Published: November 1, 2007

TAMPA - Slow job growth, coupled with the effects of a troubled real estate market, is pushing down demand for new homes in the Tampa Bay area, according to a report released Wednesday.

The report seems to contradict what's happening nationwide and may indicate Florida's housing weakness may be affecting the local economy. The Commerce Department said Wednesday that the economy grew at a fast 3.9 percent pace despite problems in the nation's housing industry and credit markets.

Locally, builders have responded to the relatively slow job growth by constructing fewer houses.

Builders started work on 1,732 single-family homes during the third quarter of 2007, down nearly 57 percent from 3,993 in the same quarter last year, according to Metrostudy, a Houston-based housing research firm.

'We are doing what we need to do to get the market back in balance,' said Tony Polito, director of Metrostudy's Tampa Bay division.

Annual job growth in the Tampa area was 13,400, just 54 percent of the expected growth of 25,000 new jobs. Although jobs are still growing, demand would create a need for only 7,500 housing units, according to the report.

Tampa's unemployment rate in September was 4.3 percent, slightly higher than the statewide rate of 4 percent, the report said. The national rate for the same month was 4.7 percent. Economists generally consider a 5 to 5.5 percent unemployment rate as full employment.

Polito said even though unemployment in Tampa is still strong, fewer jobs are being created than in 2004 and 2005. That translates to waning demand for new homes, he said.

'The good news is builders are building to demand,' Polito said. 'That's good because we're not adding to the numbers of finished, vacant homes.'

Single-family closings during the third quarter of 2007 totaled 2,754 units, 35.8 percent lower than last year's third-quarter rate of 4,287 units. Metrostudy counts a closing as a home that is now occupied.

Single-family inventory, which includes units under construction, finished vacant units and model homes, was 8,242 at the end of the third quarter. That represents a 6.8-month supply of homes and means it would take that long to sell them all at the current selling pace.

The report said overall housing inventory dropped 39.9 percent, compared with September 2006, and homes under construction fell by 5,457 units to 3,770.

The Tampa Bay area has a 3.1-month supply of finished, vacant homes, Polito said. That includes builders' inventory homes and homes bought by investors who have been unable to sell quickly. A typical supply in Tampa Bay is 1 to 1 1/2 months, Polito said.

At the current rate of absorption, supply and demand for homes won't balance until fall of 2008, Polito said.

Joseph Narkiewicz, executive vice president of the Tampa Bay Builders Association, said the increased finished inventory is made up mostly of homes bought by speculators, not homes that builders have been unable to sell.

'There's still demand for new homes, Narkiewicz said. 'Builders are seeing traffic in the model centers and we're still optimistic that we'll see a recovery that will be dramatic and rapid.'

Reporter Shannon Behnken can be reached at (813) 259-7804 or sbehnken@tampatrib.com.

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