Region's housing market still hot

New-home starts are up 6%, but analysts expect a cooling trend

Jack SnyderSentinel Staff WriterN

November 12, 2005, Orlando Sentinel

Area home builders worked at a furious pace during the third quarter of the year, launching 8,347 single-family homes, or 6 percent more than during the third quarter of 2004, according to market data released Friday.

Population and job growth are feeding the market, along with second-home buyers, retirees and investors, said Anthony Crocco, Central Florida director for Metrostudy, a national housing research company based in Houston.

"The Central Florida housing market is still very strong," Crocco said, though the third-quarter growth rate was down markedly from just two years ago, when new-home starts for the same three months surged nearly 20 percent from a year earlier.

"Some signs of an overheated market are appearing, along with a good bit of speculation," Crocco said, "primarily in the condo arena, to a lesser extent in the area's town-home projects, and in the short-term rental/investor corridor near the attractions."

The market area surveyed includes Orange, Osceola, Lake, Seminole and northeast Polk counties.

Crocco said that, during the 12 months that ended Sept. 30, builders started 28,792 single-family homes, up 6.7 percent from the same year-earlier period.

Sales of single-family homes that closed during the third quarter totaled 6,541, or 8.1 percent higher than a year earlier. Closings during the 12 months that ended Sept. 30 totaled 24,935, or 8.2 percent higher than a year earlier.

Crocco said most builders have "significant" backlogs of houses sold but not yet built, and the pace of sales remains strong.

Mortgage rates have edged up steadily for weeks now to more than 6 percent. The giant home-loan buyer Freddie Mac said this week the national average rate for a 30-year loan was 6.31 percent -- still low by historical standards, however.

Existing-home sales in the Orlando area have shown clear signs of slowing down a bit. The median home price fell in October after remaining flat in September, and there are indications that homes are taking longer to sell and the some sellers are reducing their asking prices to close deals.

It's unclear if the pace of new-home sales is also on the verge of slowing.

"I have a sense things may start to slow a bit," said Sam Morrow, president of Florida's Preferred Homes Inc. in Orlando. "But at the moment, we're selling everything we can build."

Fred Schaub, president of Arlington Homes Inc., a Winter Park-based luxury builder, said he's seeing no slowdown at all.

"If anything is happening, I believe it's simply the market moving from white-hot to red-hot," he said.

Schaub said he has 18 houses under construction "on spec" -- meaning he started building them without having a buyer -- including nine priced at more than $1 million. He said he has been selling the houses before completion at full price.

"Sales are not a problem," he said. "The challenge is getting them built."

Schaub said labor and some materials are in short supply.

"I can't get roof tile, and there are other material headaches, too," he said.

Jack Snyder can be reached at jsnyder@orlandosentinel.com or 407-420-5094.
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