Arizona home building nosedives amid recession concerns
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Illustration: Shoshana Gordon/Axios
Home building has decreased dramatically in metro Phoenix amid concerns about a recession.
Why it matters: As reported previously, the Valley has a housing shortage. That hasn't stopped people from moving here, but the lack of supply has pushed prices upward and out of reach of many families.
What happened: Builders ramped up construction during COVID-19 because of heightened demand, hitting numbers not seen since before the Great Recession.
- Yes, but: When the Federal Reserve began raising interest rates earlier this year and buyer demand cooled, builders pulled back immediately.
By the numbers: According to the Arizona Commerce Authority, October saw the fewest new building permits for single-family homes statewide since May 2020, when many builders halted temporarily to assess the pandemic.
- The permit numbers have been falling steadily since April 2022, the month after building permit authorization hit a 15-year high.
State of play: Realtor Rebecca Hidalgo Rains, who has worked in the industry for 25 years, said builders have "PTSD" from the housing crash of 2008, where they had tons of homes to sell and no one able to buy.
- She's heard from several builders who have pulled out of land deals in the past few months, waiting to see if the Fed lowers interest rates early next year before moving forward.
The big picture: Mark Stapp, executive director of the Master of Real Estate Development program at ASU, said that although he understands builders wanting to be cautious, the Valley needs to keep building or we'll see another huge spike in prices when demand picks back up.
- "This is exactly when we need to be building more units because we're still growing and we still need more supply."
1 silver lining: Some builders that have homes available are eager to sell them, and they're offering to buy down interest rates for new homebuyers, Hidalgo Rains tells us.