First came signs of life in the resale housing market, with prices ticking upward and demand increasing in the first half of this year.
Now, Sacramento's once-mighty new-home market appears to be stirring from its five-year coma.
A report issued Tuesday by the North State Building Industry Association showed new-home sales up 68 percent in the first six months of 2012 over the same period last year.
New-home sales remain depressed by historical standards, but they're on the rise. In June, 194 new homes were sold in the Sacramento region, up from 130 homes in June of last year, the builders' group said. Compare that with 857 new homes sold in June 2003, the highest figure in recent years, or the low of 83 new homes sold in June 2010.
Industry analysts and builders said pent-up demand and an ultra-low inventory of existing homes for sale are translating to growing interest among buyers in new houses. Every month this year has seen an increase in new-home sales over the same month of 2011, said John Orr, president of the North State BIA.
"With six months behind us, it looks like we've got a good trend going," he said. "Barring anything unforeseen on the global picture, it looks like it will hold. The Sacramento region's picture is brightening little by little."
The brightest spot for home construction is in southern Placer County Roseville, Rocklin, Lincoln and Granite Bay which accounted for nearly half of all new-home sales in the region.
Projects in Roseville include the 1,700-acre master planned community of Fiddyment Farm, where multiple builders are at work, as well as smaller "infill" projects in existing neighborhoods.
Kevin Carson, Northern California president of the New Home Company, said his firm is building houses across the region and at a variety of price points, including entry-level homes at Lincoln Crossing and million-dollar custom homes at The Collection: Granite Bay. The company is also building homes at its Madera project in Elk Grove and will soon open The Trails in Folsom.
"The people coming in are real buyers," Carson said. "They're qualifying. They're looking for homes in an immediate time frame, 30 to 60 days."
Lori McGuire, an analyst with the California Building Industry Association, said a number of factors are at work.
Historically low interest rates and prices reset to their lowest levels in a dozen years are fueling demand, she said. Tight inventory in the resale market and competition from all-cash buyers, including investors is frustrating would-be homebuyers, she said. They're turning to the new-home market.
"New homes are much cleaner, easier transactions," especially when compared with short sales and foreclosures, which account for a large percentage of the resale homes, McGuire said.
Buyers whose houses were repossessed or who left via short sales are starting to recover from wrecked credit and are looking for homes to buy, she said.
"Americans are fundamentally homeowners," McGuire said "We don't want to be renters."
Some of the new construction is happening in existing urban neighborhoods, including brownstone-style houses in Tapestri Square in midtown Sacramento and the modern Ironworks loft-style project on a former industrial site in West Sacramento.
A report released in December by the Urban Land Institute predicted that such urban infill projects will make up a larger portion of the market in the years to come. The analysis argued that Sacramento and other California cities have an oversupply of classic subdivision housing. When the market returns, it contended, younger buyers will opt for denser, urban-style housing near jobs and amenities.
Still, much of the new construction happening today looks a lot like it did in the boom era: large houses on suburban lots. What's different is the number of homes being built a few at a time instead of dozens and the prices, which have reset to pre-boom levels of $250,000 to $350,000 in many areas.
Carson said his company is focused on meeting growing demand for one-story senior housing. Others, such as home building giant Lennar Corp., are starting to offer multigenerational housing that provides quarters for parents, children and grandparents.
Greg Paquin, a local building industry analyst, said he expects to see more densely built projects in suburban settings. But he doesn't expect buyers to abandon the suburbs.
"There are a lot of master-planned communities (approved but not built out), projects with 100 units plus," he said.
"Builders have to build. That's what they do," Paquin said. "They have to build homes and sell them to satisfy investors. Sacramento and the Central Valley is one of the places they're going to do that."