Arizona lags behind nation in new home growth

PHOENIX - New home construction is increasing seemingly everywhere except Arizona.

Numbers from the Department of Commerce show work on 598,000 new homes began in August.

That's a 10.5 percent increase from July, the highest numbers in four months.

The situation is not as positive in the Grand Canyon State, where the trend is running in the other direction.

Industry experts say home construction has fallen by 4 percent.

"There are a number of factors at play," said Spencer Kamps of the Homebuilder's Association of Central Arizona.

Kamps attributes the decline to three main causes.

The first revolves around regulatory costs.

"In a down pricing market, regulatory costs have risen or stayed that same,” Kamps explained. “It is almost impossible to build a home in this price market and keep your employees.”

Problems don't only affect builders, but forces on the consumer side contribute to the problem as well.

"The minimum FICA score is 620 for a loan leaving less people eligible to purchase even though interests rates are good," Kamps said.

"Banks are not loaning money to builders for projects," he added.

In some cases, the value of a new home may be less than what it was when construction began.

Sales are being negotiated at lower prices because appraisals are coming in so low.

A short drive around any Valley community will point to a well known problem-a glut of foreclosures.

That drives the prices of existing homes down while minimizing the demand for new homes.

All of that comes back to the builders who, at least in Arizona, will have to wait until the market turns around.