Research says Salt Lake underbuilt in homes

The greater Salt Lake new-home market has shifted from being overbuilt in 2005 and 2006 to being what may be an underbuilt situation, given the region's growing population and strong demographics, according to housing market research firm Metrostudy.

Eric Allen, director of Metrostudy's Utah/Idaho region, said the most notable change in the new-home market has been in the category of finished vacant detached-home inventory. Metrostudy uses finished vacant inventory as a fundamental indicator to monitor the health of housing markets.

Inventory of detached new single-family homes decreased 56 percent in 2009. According to a release, there were only 875 finished detached vacant homes available for sale — a 2.2 months' supply at the current annual closings pace and slightly above the ideal balanced supply of two months.

Allen called the scenario "an extremely good sign for builders, as buyers will see a need for new construction."

Metrostudy conducts a count of all new housing units in subdivisions within the market area each quarter. Allen said a bright spot in the market is the decline in total inventory, which he said has decreased consistently since the second quarter of 2007.