Even as new home sales in 2012 rose dramatically from the year before, the number of projects building homes in the Sacramento region fell to its lowest level since the last housing bust at the end of the 1990s, a real estate information and consulting firm reported Friday.
"Even though there are fewer projects, there is a greater number of sales per project," said Greg Paquin, head of the Folsom-based Gregory Group, explaining the apparent contradiction.
"We are in a transition or ramping-up period from essentially very little building to the expectation of building again at relatively normal levels in the future," Paquin said.
By the third quarter of this year, 2,129 new homes had been sold in the region – greater than the 1,668 sales in all of 2011, the firm reported. The Gregory Group estimates total new home sales for this year at 2,838 – 70 percent greater than sales in 2011.
With interest rates at near-record lows, and an extremely tight supply of resale homes on the market, buyers have increasingly turned to new homes. Builders in Folsom, Roseville, Elk Grove and other areas have been cautiously increasing production.
At the same time, the number of new home projects has continued to decline. There are only 85 projects now selling in Sacramento, Placer, El Dorado, Yolo, Yuba and Sutter counties. That's six fewer projects than in the second quarter of 2012 and the lowest number since the fourth quarter of 1999, when The Gregory Group started keeping track.
Paquin said the terrible market conditions in the past five years accounted for the decline in projects. But even now, when sales are picking up, it's become tough for home builders to find suitable land to build on, and they also have other hurdles to clear.
"Some landowners are holding out with the expectation of a higher land price in the future," Paquin said. Other landowners, he said, will have to go through the government approval process again, or "redesign the product and the land plan for current market realities."
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