The Phoenix Business Journal

The total number of building permits issued for new homes in metro Phoenix for the first 10 months of 2005 totaled 54,041, up 5 percent over the 51,456 issued for the same period in 2004, according to housing analyst R.L. Brown.

If that pace continues, the 2005 permit total is expected to exceed the record 60,872 permits issued in 2004, Brown said in the newest issue of his monthly report, The Phoenix Housing Market Letter.

His monthly figures also show that new home closings for the first 10 months of the year reached 45,648, up nearly 16 percent from 39,445 for the same time period in 2004.

And in the resales category, 116,435 existing homes were sold through October, up nearly 24.5 percent from the 93,562 sold during the comparable time in 2004.

Brown, in his monthly analysis of building permits, new home closings, and resales, as well as conversations with home builders, said subtle changes in the market were expected.

He said the 30 percent increase in the median prices of new homes and the 43 percent jump in the median prices of resale homes over the past 12 months had to begin slowing. The median price of new homes is $251,000, and the median resale price is 249,000, according to his report.

“In our opinion, these rates of increase are unsustainable, and the market will eventually force an adjustment,” Brown said.

Among future new home sales, Brown expects “that the rate of price increase will continue to decline to a level where the builders sense that they can maintain the level of velocity generally equal to that of earlier this year.”

“That number is probably in the range of $2,000 per month average per (floor) plan increase,” and even lower, depending on the influence of interest rate changes, he said.