There are signs of greening in Phoenix’s brown desert of a market. For the first time in a long while, Shea Homes is adding staff to build and sell homes.

“We have had business pick up so much that we have been able to hire back some people,” said Lynnae Clore, who is in charge of sales communications for Shea’s Arizona operations.

The company, which sold 40 homes in Phoenix in August and 370 so far this year, has hired two part-time designers and a handful of building superintendents. “We’ve gotten approval in the Phoenix area to start new homes,” Clore said. “We’ve even been starting spec homes.”

That’s because spec homes have been selling well. “We have people out everyday asking if we have any spec  homes,” Clore said. The inventory of finished homes has shrunk from 94 to 4 since the beginning of the year, and Shea wants to have additional homes ready to sell before the $8,000 first-time buyer tax credit ends Nov. 30.

Clore said she thinks some of Shea’s success is coming from a strong marketing campaign designed to distinguish its new homes from foreclosures. The company created the "Dare to Compare" Web site, which highlights the advantages of buying new and the hidden costs of purchasing a distressed property. “We know that our competition these days is foreclosures,” Clore said.

While a positive development, the new construction hires by Shea still are just a drop in the bucket of what the state’s construction job force needs to show real signs of recovery. At the end of July, the Phoenix area alone had lost 39,500 construction jobs in a year, down 28% according to the Associated General Contractors of America’s Web site.

Part of the challenge has been plunging home values in this formerly hot housing market. But home prices in Phoenix were stable from May through June, with a typical value of $104,000, according to the Case-Shiller Index. That's less than half the high of $227,000 the index reached in summer 2006.

In terms of new homes, the median price for a detached new home sold in Phoenix during 2009's second quarter was $188,990, according to Hanley Wood Market Intelligence, which also reported that builders sold 3,444 new homes in the second quarter, down 19% from the same quarter of 2008 but an improvement from the first quarter of 2009. (Hanley Wood Market Intelligence is a research firm owned by the publisher of BUILDER.)

Phoenix's speculative inventory of detached homes stood at 1,638 on June 30, which translates into a 2.3 month supply versus a 2.4 month supply in the same period in 2009. The inventory of attached product was dramatically higher--3,140 homes, a 32.3-month supply under current selling conditions, according to Hanley Wood Market Intelligence.

Teresa Burney is a senior editor at BUILDER and BIG BUILDER magazines.

Learn more about markets featured in this article: Phoenix, AZ.