Foot off the gasoline, pumping the brake, not stomping on it, to avoid a crash on a slippery surface — that's how builders in the Oklahoma City area started the year and the race to full recovery in housing.
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These are yellow-flag laps and caution is out, to continue the racing metaphor. Sales statistics from last fall forward advise a slowdown.
Oklahoma City, Edmond, Midwest City, Moore and Norman issued just 271 single-family permits last month compared with 483 in January 2006 — a 44 percent decrease.
Slipperiness hasn't been a mere metaphor this winter.
"The ice and snow we have experienced over the last two months have been the main reason for the limited starts,” said Caleb McCaleb, owner of McCaleb Homes in Edmond and president of the Central Oklahoma Home Builders Association.
But neither is the caution:
"I also believe that builders are still cautious because of the oversupply of new-home inventory in certain price points,” McCaleb said. "Our builders are seeing great traffic and quite a lot more contracts since the sun has come back out. We expect strong starts to resume again by late April or May.”
Builders started the year by scaling back plans in every city tracked by The Oklahoman.
Oklahoma City issued 181 permits, a decrease of 36.3 percent. Edmond issued 28, permits, a drop of 52.5 percent. Moore issued 28, a decrease of 45 percent.
Midwest City builders slowed the least, issuing 19 permits, just one less than in January 2006.
Norman builders came closest to slamming on the brakes, issuing only 15 permits, down 78.3 percent from the 69 permits issued in January 2006.
"It's important to understand that in January 2006, permits were being pulled at a rate that exceeded an already record demand,” said Jeff Click, vice president and secretary-treasurer of the Central Oklahoma Home Builders Association. "While demand does remain strong, it has softened compared to this time last year, so it stands to reason that fewer permits have been pulled in January 2007.”
In addition, Click said, "Builders are still liquidating their remaining inventories from last year and proceeding more responsibly into 2007 in replacing that inventory. When you combine those two considerations, it's a natural and expected effect on permit numbers, so we're not surprised by it.”
The other main measure of health in housing — home sales — were off only slightly last month, comparatively. Realtors also partly blamed the wintry blasts.
Average interest rates were virtually unchanged: 6.17 percent for a traditional 30-year mortgage last month, 6.06 percent in January 2006 — an increase of only 1.8 percent.
Realtors handled the sale of 1,086 homes last month, a drop of 3.6 percent compared with January 2006, according to the Oklahoma City Metro Association of Realtors.
Evidence of appreciation continued, however, even though volume slipped 1.5 percent, from $154 million last month to $151.6 million in total sales in January a year ago. The median price jumped from $115,700 in January 2006 to $123,383 last month, an increase of 6.6 percent.
That suggests, as builders and Realtors have been saying, that sales of higher-end homes have taken the brunt of the slowdown — although any comparison of such a small set of statistics, like the market itself, should be treated with caution.
"The ice and snow we have experienced over the last two months have been the main reason for the limited starts.”
Caleb McCaleb
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Pitfalls seen for housing market
The biggest risk to the 5-year-old U.S. economic expansion is that the housing slump might take an unexpected turn for the worse, analysts say.
In one dire scenario, not only would consumers and businesses clamp down on spending and investing, but troubles also could spread to lenders dealing in risky mortgages, triggering a financial crisis.
The latest U.S. economic barometers released Tuesday were mostly good, but they failed to ease investors' anxiety. The National Association of Realtors reported that sales of previously owned homes — the biggest chunk of the housing market — rose by 3 percent in January from the previous month. That was the largest gain in two years.
While the sales boost was helped out by last month's unusually warm weather, it still raised hopes that the worst of the residential real-estate bust may be over.
AP Economics Writer Jeannine Aversa
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