Housing starts along the Wasatch Front took a serious hit in 2007 as local builders took out the fewest number of residential construction permits in 14 years, according to data from The Construction Monitor, which tracks building permits issued in select cities and counties across the western United States.
Permits were issued for 9,877 single-family homes along the Wasatch Front last year, which was the lowest level since 1993 and marked a 36 percent decline in permit activity from the previous year, the most since such records were kept in Utah beginning in 1990.
"Builders got a little carried away, and as a result we have about 90 percent more new homes for sale than we had a year before, so builders have cut back quite sharply," said Zions Bank economic consultant Jeff Thredgold.
He said the supply of new homes for sale in all price ranges in Utah has nearly doubled during the past 12 months, leading to a buyer's market for new homes.
The Commerce Department reported Thursday that across the nation, construction was down 24.8 percent from 2006, the second largest annual decline on record.
Some economists believe the current slump in housing will rival the dive seen in the late 1970s and early 1980s, when housing construction fell four straight years before beginning to recover after the severe 1981-82 recession. For December, construction fell by a higher-than-expected 14.2 percent.
While housing starts were low, commercial real-estate firm Commerce CRG reported nonresidential construction in Utah last year had its best year since 1997. The value of nonresidential construction was just shy of the all-time high of $2.2 billion.
Commerce CRG reported that in 2007, nonresidential construction was dominated by a number of mid-sized projects. The highest value permit was $80 million for the IHC Riverton Hospital, followed by the Hamilton Partners' office building in Salt Lake City at $79 million and the Real Salt Lake soccer stadium at $60 million.
Nonresidential construction increased from $1.2 billion to $2.1 billion over the past six years, registering the biggest single-year increase in 2007, up $400 million, or 23 percent, according to Commerce CRG data."The commercial market is doing well, both in terms of absorption of existing space and outside investment," Thredgold said. "Commercial real estate is in good shape."