Housing Slowdown Unlikely in Phoenix


Worries of a slowdown are spreading across the U.S. housing market, especially after this week’s sales miss by homebuilder Lennar Corp. confirmed for many the notion that demand is waning.

The homebuilder, which has a number of communities in the Valley, later said it was seeing improved home sales in the new fiscal year and that its lower-than-expected fourth-quarter sales were a temporary blip.

The Federal Reserve also has signaled it will slow its pace of interest rate hikes, which eased some pressure on 30-year mortgage rates.

Even so, concerns about a housing slowdown remain, but local experts say that worries of a slowdown in Phoenix are greatly exaggerated, mainly because of two things: caution and job growth.

Even in the midst of a strong economy, Valley homebuilders have been more moderate with construction than in the previous boom. Compared with 2005, when builders pulled 60,000 permits, only 24,000 were pulled in 2018. Of course, there’s also a continued shortage of construction labor, so builders’ caution may be partly market-driven than a conscious choice.

Then there’s the region’s job growth, which hummed right along in 2018 and likely will keep pace during 2019. A corollary to job growth is population growth, and so long as people move here, they need places to live.

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