May 14, 2008 — Residential construction in Utah is falling at a record-breaking pace as conditions have moved from an orderly correction to a serious contraction. The first quarter of 2008 reported a 58.2 percent year-over decline in total residential building permits (homes, twin homes, condominiums and apartments).
This ranks as the most severe quarterly contraction ever reported, surpassing the fourth quarter of 2007, which had a 53.4 percent drop. Prior to these back-to-back quarters, the worst quarterly decline recorded in Utah was the third quarter of 1987, when new permit activity dropped 50.1 percent.
“This will be a very difficult year for home builders,” says James Wood, director of the U’s Bureau of Economic and Business Research. “But for home buyers, even with the decline in construction there should be plenty of homes on the market to choose from, both new and existing. Prices will also be more negotiable.”
In the first quarter of 2008 only 2,234 residential building permits were issued statewide. The weakest sector by far was new single-family homes. The 65.2 percent decline in the first quarter of 2008 for single-family homes broke the 28-year-old record set in the second quarter of 1980 when new single-family construction fell by 56.4 percent. No sector has escaped the downturn. Twin homes and condominiums are down by 48.9 percent, manufactured homes are off 45.8 percent and apartments 18.4 percent.
Compared to other states, Utah’s first-quarter performance ranks fourth worst. Only Rhode Island, Arizona and Illinois had greater declines in residential permit activity in the first quarter of 2008.
Two of the hardest hit counties within the state were Utah and Summit Counties. In the first quarter, new residential permits in Utah County dropped from 1,458 in 2007 to 408 in 2008, a 72 percent decline. In Summit County, residential activity dropped 77 percent. Only one of Utah’s 29 counties had an increase in residential construction: Rich County, where the number of new homes in the first quarter increased from 10 in 2007 to 14 in 2008.