1st Issue of February 2006

Phoenix Area New Home Market Status and Statistics

The Phoenix metropolitan area continues to experience strong growth in the numbers of specs and subdivisions. The following details substantiate this claim. We expect both trends to continue for at least several weeks.

Spec Count

We have been predicting that early in 2006 the spec home inventory would surpass the all-time high count of 2,400 from May 2003. With 92 more reported in the past week, the market now boasts 2,431 spec homes! The old record has been surpassed. Looking back, we see there are now almost three times as many spec homes than only 3 months ago. And since the lowest level recorded in 2005, the spec home inventory grew over six times!

Subdivision Count

In the last week alone, we have recorded 12 new subdivisions! Now at 715, the market has 154 more subdivisions than in the fourth week of January 2005. Since the lowest count in 2005, there are now 244 more subdivisions. We have witnessed a growth of 67%. The last time we recorded 715 subdivisions was during the summer of 2004.

New Home Market Statistics Chart

The following chart shows historical activity for the last year in the greater Phoenix Metropolitan area per the Ultimate New Homes Database:

January (above) contains data accrued during the last week.

For most of 2005, the rate of growth for new subdivision openings has been primarily driven by medium-large size builders. The smaller-builder segment develops 1-2 subdivisions at a time and they almost disappeared from the market last year during the seller’s market run. With fresh inventory and a moderating market, we anticipate that a good number of smaller builders will re-enter the market in 2006.

Trend versus Data

The graph below presents a visual image of the overall trend patterns indicated by our detailed New Home Market Statistics:

Please note the above graph is not to scale. By design, this graph shows no vertical numbers. Each data point has been factored because the purpose of this graph is to provide a relational presentation. The numerical adjustments allow a better visualization of the relationships between the different measurement and trends. You will get the best perspective by looking at the overall patterns of all four measurements separately and together in relation to each of the others.