Triangle housing starts plunge 44%

Housing starts in the Triangle slumped 44 percent in the first quarter of 2008 amid "an environment of caution," especially at higher price points, according to industry firm Metrostudy.

Construction began on 2,117 units in the quarter, Metrostudy says. That's down from 3,757 units in the first quarter of 2007.

"Much of this decline can be attributed to an environment of caution, created by banks and builders, regarding new-home starts throughout the housing industry since August 2007," a release from Metrostudy says.

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Closings on new single-family homes likewise dipped. They fell to 2,899 units in the quarter, down 14.3 percent from 3,383 a year earlier.

Inventory - including homes under construction, finished vacant units and model homes - was 9,674 units as of the end of the first quarter. That represents an 8.3-month supply of new, single-family homes - up from 7.3 months in the first quarter of 2007.

And the inventory of vacant, developed lots increased to a 25.7-month supply in the first quarter. That's well above the historical 16- to 20-month typically considered a good balance between supply and demand.

Much of the slowdown in starts can be attributed to high inventory in homes priced above $400,000, Metrostudy says.

"The new home market drifted to larger, more expensive homes during the period of easy money between 2004 and 2006," Ed Dunnavant, Metrostudy's Triangle director, said in a statement. "Before the market can return to normal, the excess inventory in the higher price points will need to be sold and closed."

That will require "a conscientious effort" to boost closings and reduce inventory, Metrostudy says. When that happens, new construction will begin again in earnest.