Single-family homebuilding soars in Utah

Utahns continued to build homes at a record pace in this year's first quarter, fueled by strong demographic growth in the state's homebuying age groups, according to a new report.

Across the state, 4,842 single-family building permits were issued in the first three months of 2006, a 9.8 percent increase from 4,409 permits in the first quarter of 2005, according to the University of Utah's Bureau of Economic and Business Research.

While single-family home permits continued to show no signs of slowing, permits in the first quarter for multifamily units hit 1,062, down 37.1 percent from 1,689 in last year's first quarter.

The decline in multifamily permits left overall residential permits — including single-family homes, apartments, condominiums, mobile homes and cabins — at 6,003 in this year's first quarter, a decrease of 3.2 percent from 6,203 permits in the first quarter of 2005.

James Wood, director of the U. bureau, attributed the 3.2 percent decline to fewer condominiums being built in Washington County.

"The important point is that single-family is up almost 10 percent," Wood said. "We're almost at 5,000 single-family units in the first quarter. It's crazy. All of the weakness is in multifamily."

According to a separate report by Wood, a tremendous increase in Utah in the number of individuals in the 25- to 34-year-old age group is driving Utah's homebuilding frenzy.

Between 2000 and 2005, the 25- to 29-year-old group in Utah increased 38.3 percent, compared to a 2.5 percent increase nationally. Individuals in the 30- to 34-year-old group in Utah rose by 26.7 percent, compared to 3.4 percent nationally.

Despite the high number of permits issued, there is no serious talk of overbuilding or worries about unsold inventory, Wood said.

"Currently supply and demand appear in balance in most local housing markets," Wood said. "One possible exception is the St. George market, where investors and speculators have driven land and home prices up significantly in the past three years."

In St. George, land prices have tripled since 2001, and housing prices increased by more than 30 percent in 2005.

Kelly Matthews, executive vice president and economist at Wells Fargo, said nearly all economic indicators measuring the Wasatch Front are as "good or better than we thought it would be and better than it was last year."