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New-home building remains stuck at static growth

ALBUQUERQUE, N.M. — Even as homebuying activity for existing homes in the Albuquerque metro area accelerated in 2016, construction of new houses has remained stubbornly low, due in part to anemic job growth, says an industry official.

Permits in Central New Mexico for single-family homes was static year-over-year through December, continuing to hover at less than 1,700 — nearly one-third the level seen a decade ago.

Homebuilders took out 1,632 permits for new construction in 2016, a slight decline from 2015’s 1,645 permits that were issued.

The data were released in the Albuquerque New Housing Market Letter, a monthly publication of DataTraq. The Albuquerque area comprises the city, unincorporated Bernalillo County, the city of Rio Rancho and the village of Los Lunas.

Pulte Group led all builders during 2016 with nearly 400 permits, or about one-quarter of all those issued. DR Horton Homes and LGI Homes NM Construction took out 348 and 151 permits, respectively, according to DataTraq. The companies also were the top three builders in terms of permit volume in 2015.

“We are an industry tied to job creation,” especially the better-paying careers that can help a buyer swing a new-home purchase, said John Garcia, executive vice president of the Home Builders Association of Central New Mexico, a 700-member trade association.

“The economy’s still pretty stale,” said Garcia, who last summer forecasted that permit volume might hit 1,800 in 2016.

Recent announcements such as Facebook’s plan to build a new data center and Cabela’s new retail store are a boon for those shifting to commercial construction, but neither project will create the kind of momentum to stoke single-family home construction, Garcia said.

“We need a series of (positive) events in the economy to really move the needle,” Garcia said. “I think it will be awhile before we go back to the days when we are issuing 2,000-3,000 permits per year.”

Throughout most of the 1990s, metro-area builders pulled an average of 4,000-5,000 permits annually. The record years of 2004 and 2005 saw 7,719 and 9,445 permits issued, respectively. Homebuilding was a major engine of economic growth in the region, employing thousands of construction workers and providing business for scores of home-furnishing, appliance and landscaping companies.

Garcia also noted more homeowners appear to be “staying in place” and building additions to their existing homes, rather than buying new houses, projects which his members gladly welcome. Some homebuilders have also shifted to multifamily, condo and town-home construction, he said.