"We think in our communities we are going to be OK, but it just depends on how individual builders and developers deal with it in their individual communities," Gamvourulous said. "If they refuse to sell to speculators and investors, then their communities will probably be OK."

Gamvourulous said the slowdown in residential permits does not indicate the sky is falling.

"We're optimistic, but we are very cautious," Gamvourulous said. "Just because things are transacting doesn't mean they are real. It could be speculators. There are recisions."

Richmond American Homes, Utah's second-largest homebuilder, reported its before-tax net income for Utah and Colorado dropped to $25.2 million in the first nine months of 2006, a 49 percent decrease from $49.5 million in net income in the same period of 2005.

But while Richmond American was discounting houses it sells in Virginia by $30,000, the company noted a $95,000 increase in the average selling price for its house closings in Utah during the third quarter, compared to the same quarter in 2005, according to a filing with the U.S. Securities and Exchange Commission.

Richmond's price gains in its Utah communities helped to offset fewer closings. The company said closings on Utah houses were down 14 percent in the third quarter, compared to the same period last year. For the first nine months of this year closings fell 9 percent.

"We believe that prospective homebuyers have been delaying home purchases during this period of uncertainty," the company said in its SEC filing. "We continued to respond to the increased cancellation rate and the uncertainty in the homebuilding market by increasing incentives and offering limited time sales promotions, with the objective of improving our sales velocity."

Companywide, nearly half of Richmond American's home orders were canceled during the third quarter, up from 26 percent in the third quarter of 2005.

Kelly Matthews, executive vice president and economist at Wells Fargo in Salt Lake City, said he expects the number of single-family home permits in Utah will drop by 7 percent in the second half of this year, compared to the last six months of 2005. And he expects another 7 percent decrease in permits handed out for single-family homes in the first half of 2007.

"We're still not building too many houses relative to the population and the numbers of jobs that we have," Matthews said. "But we have to be cognizant that clearly what's going on nationwide and what's gone on in Phoenix, Las Vegas and even St. George probably will have some bearing here along the Wasatch Front."

The number of permits for single-family homes in Utah dropped to 15,614 in the first nine months of the year, down 2 percent from 15,938 permits handed out during the same nine-month period in 2005, the U. report said.

Multifamily permits saw the biggest percentage drop, a 12.7 percent decline to 4,185 units compared to 4,795 units a year ago.

The total value of all residential permits in the first nine months of 2006 reached $3.8 billion, up from $3.5 billion during the same period of 2005, according to the U. report. Residential valuations include the cost of materials and labor but not the cost of land or architectural fees.

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E-mail: danderton@desnews.com