By Jeff Ostrowski, The Palm Beach Post, Fla.
Nov. 4--Home building ground to a near-halt in Palm Beach County and the Treasure Coast in the third quarter, a period when housing starts fell to their lowest level in at least a decade -- and perhaps much longer.
With the region's housing market glutted with homes for sale, builders have cut production by 90 percent compared with a few years ago, according to housing research firm Metrostudy. The handful of housing starts marks the slowest pace of construction on Metrostudy's records, which go back to the 1990s.
"It's the lowest we can remember," Metrostudy's Brad Hunter said.
In Palm Beach County, builders started 245 single-family homes in the third quarter, compared to 488 starts in the second quarter, Metrostudy said. Earlier in the decade, builders routinely broke ground on more than 2,500 homes a quarter.
In Martin County, starts fell to 28 in the third quarter from 77 in the second quarter. Quarterly housing starts in Martin County frequently topped 300 a few years ago.
And in St. Lucie County, 39 single-family homes started, compared with 60 in the second quarter -- and 600-plus during 2003 and 2004.
"It's not much of a surprise," Hunter said. "There was obviously too much activity before." Builders' newfound austerity comes after the housing bubble of 2004 and 2005 spurred a frenzy of construction. By slowing construction, builders are taking a necessary step in healing the housing market, Hunter said. There's also a Catch-22 -- layoffs of thousands of construction workers have rippled through the economy and hampered demand for new homes.
"There is a bit of a vicious cycle," Hunter said. "The downturn we're in was triggered by the collapse of the housing market." Demand for new homes has fallen in part because of steep price cuts for existing homes, said Bruce Malasky of Malasky Homes in West Palm Beach. As long as it's cheaper to buy an existing home than build a new one, buyers will focus on existing homes, he said.
Meanwhile, there was sobering news Monday from the Census Bureau and the National Association of Business Economics about nonresidential construction. Commercial and government projects had been picking up the slack left by the housing sector, but that no longer will be the case.
"Nonresidential construction is on the verge of a potentially long slide," said Ken Simonson, chief economist for The Associated General Contractors, a national trade group.
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