22% increase in new housing

New housing inventory in the greater Salt Lake area climbed to 11,004 units in this year's first quarter, up 22 percent from 9,017 units in the first quarter of 2005, according to a report released Thursday by Metrostudy, a real estate consulting firm with offices in West Jordan.

New housing inventory includes units under construction, finished vacant units and model homes, and consists of single-family and multi-family units. The greater Salt Lake region includes Davis, Salt Lake, Summit, Tooele, Utah, Wasatch and Weber counties.

Total housing inventory in the first quarter

represented an 8.8-month supply, meaning that if no new homes were started it would take 8.8 months to sell the current housing inventory.

According to Eric Allen, director of Metrostudy, a housing inventory supply of six to nine months is considered a "healthy" range.

"The homes that we're building are being bought and closed on," Allen said. "We're not just building a bunch of houses and they're sitting there on the ground."

At 516 housing starts, Jordan Hills Villages in West Jordan was ranked No. 1 for the most new housing starts in the greater Salt Lake market for the 12 months ended March 31. The Ranches in Eagle Mountain came in second at 480 units, and Daybreak in South Jordan was third at 474 units.

While demand for new homes is up, so are prices.

The report said the percentage of available new homes priced below $200,000 continues to decline.

"Prices are definitely going up," Allen said. "Obviously land prices are going up a lot, and material costs as well."

Of the 17,000 new homes started during the 12 months ended March 31, only 23 percent were priced below $200,000, compared to 41 percent of new home starts priced below $200,000 during the same period a year earlier.

In the 12 months ended March 31, the median new home price of the greater Salt Lake market increased to $273,954, a 19 percent increase from $229,682 in the same period a year earlier.

Nationally, new housing construction in 2006 will drop about 5 percent, according to the report by Metrostudy, which has national headquarters in Houston.

Taz Biesinger, executive vice president of the Home Builders Association of Utah, said that, while new home prices are increasing, Utah's housing market is healthy.

"Most builders are not having trouble selling homes once they are finished," Biesinger said. "In fact, one of the things that I have observed recently is a lot of builders are waiting till they have the house completely finished before they even put it on the market. They are not having any trouble selling them once they put them on the market."

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E-mail: danderton@desnews.com