Utah housing slowdown on way?

New housing permits issued across Utah in this year's first quarter continued to tumble, indicating a housing slowdown could be around the corner.

For the three months ended March 31, permits issued for new houses, condominiums and apartments in the state fell to 5,267, a 13 percent drop from the number of permits issued during the same quarter in 2006, according to a report by the University of Utah's Bureau of Economic and Business Research.

Many of the state's strongest housing areas showed double-digit declines.

In Draper, housing permits in the first quarter were down 36 percent. Herriman issued 38 percent fewer permits than it did a year ago. South Jordan also showed a 38 percent drop. Lehi saw permits fall by 33 percent. Housing permits in Spanish Fork were down 23 percent, and in St. George, permits decreased 14 percent.

Eagle Mountain, however, bucked the downturn with a 55 percent increase in new housing permits handed out in the first quarter — from 181 a year ago to 281 this year. Springville also witnessed a jump in new permits, issuing 126 in this year's first quarter, up 64 percent from 77 permits in the first quarter of 2006.

Tim Metler, president of the Utah Valley Home Builders Association, said the rise in new permits in Eagle Mountain is due to cheaper land there, allowing builders to offer more competitive pricing on new homes.

"If the cost of land keeps going up, then I think there is a possibility of new permits going flat or declining, but if the cost of land will stabilize somewhat I think then the market will continue to grow," Metler said. "To me that's a significant concern — can you find land to build on? I think that's getting more and more difficult due to the sheer cost of land."

Mark Knold, senior economist at the Utah Department of Workforce Services, said housing permits overall this year will be down compared to 2006, marking the second consecutive year of declining housing permits. Total residential permits in 2006 fell to 26,322 units, a 6.9 percent drop from 2005's record 28,285 permits.

"And I anticipate that '08 will be lower than '07," Knold said. "But I don't see the (first quarter) 13 percent drop as being alarming. We knew that was coming. The run-up that started in '03, '04 and '05, we knew that it was going to be high, and we also knew it was going to turn around and come off that peak and go back down."

Clint Carter, a building official with Lehi, predicts the city will issue roughly 1,500 housing permits this year, about a 9 percent drop from 1,649 issued in 2006. Yet if the first quarter numbers are any indication, the decline could be more severe.