This is an archived article that was published on sltrib.com in 2006, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
The long-anticipated slowdown in the nation's long housing boom seems to have finally arrived, although Utah and the rest of the West bucked the trend by posting an 11.3 percent increase in January after a 6.3 percent gain in December.
Sales nationwide of new homes came in at the slowest pace in a year in January, and the backlog of unsold homes rose to a record high, the Commerce Department reported Monday.
Making those developments even more dramatic was the fact that they occurred during an exceptionally mild January - the warmest in more than 100 years.
''The weather in January was as good as it gets, yet demand fell,'' said Joel Naroff, chief economist at Naroff Economic Advisors.
The Commerce Department reported that sales of new single-family homes dropped by 5 percent to a seasonally adjusted annual rate of 1.233 million units last month. The decline was bigger than expected, dashing hopes that the milder-than-normal January would help boost demand. The warm weather had pushed up the level of construction starts last month by 14.5 percent, the fastest rate in three decades.
The increase in the West last month was a continuation of 2005's results that saw Utah home prices rise as much as 12.4 percent in counties along the Wasatch Front. Last year also saw the number of homes on the market in Utah plummet, while it took fewer days for homeowners to sell their properties.
The the new report showed that with sales lagging nationally, the increase in building activity left a total of 528,000 new homes still for sale at the end of the month, a nine-year high.
That represented an increase of 20.8 percent from a year ago and raised the prospect that a glut of unsold homes around the country could start driving down prices.
That didn't occur in January, however. Even with the softening in sales, prices were up, with the median price climbing to $238,100, up 4 percent from December, but below the high of $243,900 set in October.
For the past few years, home prices have been surging at double-digit rates, gains that analysts said probably will slow now that sales are softening and inventories of unsold homes are rising.
Some economists are worried that with the inventory of unsold homes rising, there could be significant downward pressure on home prices, triggering a chain reaction similar to the bursting of the stock market bubble in 2000, a development that contributed to the 2001 recession.