The Bureau of Labor Statistics recently ranked Phoenix 9th among all metropolises nationwide for job creation. Phoenix had only recovered 44% of the 250,000 jobs it lost during the last recession, so there’s plenty of room for the desert metro to expand. That’s good news for the area’s home builders, whose 11,000-plus starts in 2012, while up by two-thirds over the previous year, were a far cry from the 65,000 homes per year started during the last housing boom here, or even the 30,000 to 35,000 starts experts now predict will be this market’s leveling-off point.

Ben Sage, director of Metrostudy’s regional office in Mesa, Ariz., shared details about Phoenix’s recovery during Builder’s Housing Leadership Summit last week.

He noted that Phoenix “is not all the way back yet.” The 41,100 jobs this market added between March 2012 and March 2013 were “pretty tepid” by historical standards. But Sage sees encouraging signs of sustainable growth. For one thing, Phoenix’s resale market, whose annualized sales rate rose to more than 80,000 in April, is “extremely strong.” And because overall housing inventory is only 2.1 months, rents and single-family home prices are rising again, less encumbered by REO properties or short sales that continue to decline.

(Sage noted that in the previous few months, there had been as many cancelled foreclosure notices as new foreclosure notices in Phoenix.)

The median closing price for resales stood at $170,000, versus $250,000 for new homes. (Indeed, nearly half of all new-home starts are priced between $150,000 and $250,000.) Sage thought Phoenix is still “undervalued,” but didn’t expect the market would return to normalized starts and new-home sales until the price gap separating resales and new-home sales narrows.

Nevertheless, construction is accelerating. Phoenix ranked 3rd in annualized permits among all metros in the first quarter of 2013. There are currently about 500 model homes and 300 sales offices open there, the lion’s share belonging to big builders. Last year, the market’s top 20 builders—most of them nationals or regionals—captured nearly 8 out of every 10 closings. PulteGroup and D.R. Horton alone controlled more than 18% of the market’s closings last year, and in the first quarter of 2013 the two giants ran neck and neck for the lead. Meritage Homes and Taylor Morrison were in an equally close race for 3rd and 4th place.

Many of the market’s builders collide competitively in the town of Gilbert, which accounts for nearly one-fifth of all of Phoenix’s housing starts and is by far the hottest submarket, with more than 2,000 annualized starts projected for this year. The next most-active submarkets are Peoria and Goodyear, each with just under 1,000 annualized starts projected. Goodyear is home to the market’s best-selling community, Palm Valley, which in the first quarter of 2013 was generating an annualized 314 starts and 257 closings.

Big builders have found their appetites for land again, so it’s not surprising that Phoenix is facing a finished-lot shortage. Developers in Phoenix delivered 1,500 lots in the first quarter of 2013, up 28% from a year ago but hardly keeping pace with the nearly 2,500 lots that the market absorbed that quarter. There are only 85 subdivisions under construction in Phoenix today, according to Nate Nathan, a highly respected local land broker who participated in a panel discussion on the housing market’s recovery following Sage’s presentation.

Sage elaborated that while there are nearly 54,000 vacant developed lots in Phoenix (about a 58-month supply at current absorption rates), only about 15,000 of these are in desirable locations. Sage showed that the available inventory of 45- to 89-foot lots ranges from 120 months in Maricopa to less than 30 months in Goodyear and North Scottsdale. And the number of newly recorded lots throughout Phoenix has been hovering at only around 2,000 for the last four quarters.

John Caulfield is senior editor for Builder magazine.