Amid an ongoing housing shortage, homebuilders in ÃÛèÖÖ±²¥ are tapping the brakes on new homes as concerns about rising interest rates, construction and labor costs weigh on affordability.
But, closings remained strong with 1,752 homes closed from January through June — versus 1,688 in the first half of 2021 — and the average new home price climbed to $468,212.
Builders pulled 2,812 permits in the first half of this year, a 16% drop from the same period in 2021.
“I was surprised to see the June numbers,†said David Godlewski, president of the . “Interest rates and what’s happening to people’s 401Ks is causing buyers to pause.â€
Because of supply-chain backlogs and the chronic labor shortage, the time it takes to deliver a home has doubled, he said.
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“There’s been a considerable drop-off in new sales as well as cancellations,†Godlewski said. “Someone who wanted that home six months ago when interest rates were at 3 or 4% and now is more than 6% can’t do it. They’d rather walk away.â€
Builders are watching closely, wary of the overconfidence that resulted in the housing crash.
“The memories of 2008 still linger,†Godlewski said. “They’re not going to risk getting involved in a project that looked good six months ago — they have to look at it in real time.â€
In April of this year, the top five homebuilders for permits were:
Meritage: 71
KB Home: 55
Lennar Homes: 42
Richmond American: 39
Pulte Homes: 30
In June, those permit numbers dropped to 30, 17, 30, 11 and 21, respectively.
Godlewski hopes it’s a temporary pause.
“Because this doesn’t help the supply or inventory issues that we have.â€
Demand remains
In the resale realm, buyers seemed to pull back as well.
Comparing June 2021 to June 2022 there was a 19.31% drop in resale homes, from 2,496 to 2,014.
The average resale price in June was $396,401.
“Resale buyers responded to the concerning economic news and institutional buyers, flippers, and small-scale investor buyers held back also,†said local housing analyst Jim Daniel.
He believes the heightened caution is an offset to the bright-eyed optimism of just a few months ago.
“We’re forecasting a 10 to 15% drop for the year in permits,†said Daniel, with . “But that’s on the back of 17% increases two years in a row.â€
He expects builders will adjust floor plans or diversify into other types of housing, such as built for rent homes or townhomes.
“They know the entry-level buyers are the ones hit the hardest,†Daniel said. “They’re tapping the brakes to figure out ways to make the product more affordable.â€
Builders haven’t had to slash the price of existing homes and the population growth in ÃÛèÖÖ±²¥ and ÃÛèÖÖ±²¥ will continue to drive demand for new housing.
“There are housing markets across the country that would love to have the housing activity that ÃÛèÖÖ±²¥ has,†Daniel said. “We’re not going into this with our hair on fire.â€
Aerial photos of ÃÛèÖÖ±²¥, Pima County, in 1975
ÃÛèÖÖ±²¥ aerial photos, 1975
Kino Community Hospital, now Banner-University Medical Center South, under construction on East Ajo Way in this 1975 aerial photograph.The 221-bed, $24 million facility was built to replace Pima County Hospital. Lots of open desert around it. Today, Kino Sports Complex (ÃÛèÖÖ±²¥ Electric Park) sits just beyond the hospital to the west.
ÃÛèÖÖ±²¥ aerial photos, 1975
1975 aerial photograph of the Carl Hayden Community Hospital at Congress Street and Granada in ÃÛèÖÖ±²¥. Southern Pacific Railroad opened the hospital originally as a tuberculosis sanitarium for railroad workers in 1931. It was one of many railroad hospitals around the country. It was opened to all residents in 1964 and renamed in honor of Sen. Carl T. Hayden. It closed in 1974 and was demolished in 1979. It is not the site of the U.S. District Courthouse. The El Paso and Southwestern passenger train station is at right. It is still standing.
ÃÛèÖÖ±²¥ aerial photos, 1975
1975 aerial photograph taken from roughly E. 36th Street and S. Martin Avenue, looking north, shows the ÃÛèÖÖ±²¥ National Guard armory and new, ÃÛèÖÖ±²¥ Main Post Office on Cherrybell Stravenue. What's missing? Kino Parkway (old Campbell Avenue ends at 29th Street at left). Also, there's no Kino/Campbell overpass at the Southern Pacfici Railroad yard.
ÃÛèÖÖ±²¥ aerial photos, 1975
Wilmot Road looking south from roughly the Southern Pacific Railroad tracks in this1975 aerial photograph. The interchange at Interstate 10 is in the middle of the photo. None of the businesses at the freeway still exist. The buildings on the Northeast corner of the interchange have been demolished. New housing subdivisions now flank Wilmot.
ÃÛèÖÖ±²¥ aerial photos, 1975
The City of ÃÛèÖÖ±²¥'s Price Service Center at Park Ave. and Ajo Way nearing completion in this 1975 aerial photograph. Fire Station 10 and the fire training center (since relocated) are at the right edge. Trees and mobile community at lower right? Gone. All of it, including the trees. The mobile home dealer on the same corner is gone – now a large Circle K.
ÃÛèÖÖ±²¥ aerial photos, 1975
1975 aerial photograph of Interstate 19 and Esperanza in Green Valley, looking south. La Cañada Drive (divided road) is at right. Remarkably, much of the area looks much the same today.
ÃÛèÖÖ±²¥ aerial photos, 1975
The 640-acres of the Pima County Fairgrounds near Houghton Road and Interstate 10 in a 1975 aerial photo. The county severed it's relationship with the Southern ÃÛèÖÖ±²¥ International Livestock Association, the group that had operated the county fair since 1959, when the fair was at 6th Ave. and Irvington Road. The county purchased SAILA's interest in the fair property for $636,188 and assumed a $43,000 liability.
ÃÛèÖÖ±²¥ aerial photos, 1975
The Helvetia Mine, part of the Rosemont/Helveita Mining District on the western slopes of the Santa Rita Mountains in a 1975 aerial photograph. The mine has been active since the late 1800s. The town of Helvetia sprang up to support several mines in the district. In 1968, limestone mining began and much a sizable chunk of land was scraped away. The mine ceased operation in 1974.
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