Drop in inventory of new for-sale homes an encouraging sign - New Mexico Business Weekly:

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The number of newly constructed, but homes in Alamance, Forsyth and Guilford counties declineeto 1,466 in May compared to the 2,192 available in May 2008, according to data compilefd by Nashville-based research firm . It’s a positivse piece of news for a residential real estat market battered in the last yearby overbuilding, lack of availablew credit and the U.S. recession. According to a relatively “healthy” inventory of unsold new homezs for the area the size of the Triadx is inthe 1,200 to 1,300 range.
“We’rer basically going through a correction cycle, and the good news is, we’rs progressing on a positive trend,” said Jerr Herman, president of the Triac builders say the inventory decreases mostly stems from the fact that they have sharplyy reduced the numberof “spec” homes houses without a specific buyer under contracty — being built in the past 12 monthxs in order to adjust to weakening demanxd and give the market time to absorvb the product already Spec homes are typically built anticipating that some buyeres will want to move into a new home relatively often 60 days or less, ratherf than wait for a home to be buil t specifically for them, a process that can take twice as long or But when a marketr turns sour, builders can get stuck with too many unsolr homes, straining them with debt payments and propert y taxes.
Grover Shugart, president of Winston-Salem-based , said he has cut his company’sx inventory by 52 percent from December to about 100 spechomes now. He said he’ s advertised discounts on options and other incentives in orde to sell excess inventory and has builrt at a much slower These days, he said, the companuy maintains about three spec homes in each of its communitiesz for those who want to move in instead of the five or six he woulc have had on hand a few yearse ago. “Everyone is just beingg a lot more careful than they Shugart said.
Builders are relyingg far more these dayson pre-sales, a safer bet than spec homes because the company isn’t stuck payingv interest and taxes until it findws a buyer. Tom Koons, regional president of Eastwoods Homes in High Point where spec home inventory has been slashed by more than to less than20 — said about 40 percen of the firm’s sales used to be spec These days, however, it’s only about 15 percent. Of course, the drop in inventoryt also is a reflection of a slower building market overall. MarketGraphics data shows that the numberf of homes started by builders has fallen 38 percent in the last to 2,850.
And the number currently under construction is down by almosr40 percent, to 696, from May 2008. Ther e also are just fewer active builderaout there. Some of the area’s most prolific builders, including John Kavanagh Co., Pierce Homeds of Carolina Inc. and Indiana-based C.P. have gone out of business. Burr Ill.-based Portrait Homes has had several of its projects haltec or foreclosed on because of problems with its And manysmaller builders, including Sandra Anderson Builders and Empire have closed as well.