New-home permits in region drop 45% vs. '08

Builders in Hampton Roads continued to cut back in new-home construction during the past three months, according to a report released Friday.

Cities here issued 584 new-home permits between January and March, according to Residential Data Bank, a Suffolk-based housing market research company. The number fell about 44.7 percent compared with the same period last year.

Building permits represent one of the first steps in building a home. Economists and real estate experts follow the figures to monitor builders' activities.

The research company did not break out the first-quarter data by city.

Last year, new-home construction and sales in Hampton Roads fell to their lowest points in more than two decades, with declines spread across the region. The steepest drops were in Newport News, which saw permits fall nearly 60 percent, and in Portsmouth and Suffolk, which both saw permits decline by more than 40 percent. The mildest decline was in Chesapeake, which saw a 17 percent decrease in permits issued.

"Certainly the activity is down, because it had to be," said Terry Gearhart, vice president of marketing for Virginia Beach-based homebuilder Terry Peterson Residential Cos. "We had too much supply. We needed to choke down inventory."

As is seasonally typical, the total number of permits issued in the past quarter was up from the fourth quarter of 2008, during which builders applied for 496 permits. Gearhart said builders generally begin applying for permits during the first quarter so that homes can be ready by the spring buying season. Still, few builders are willing these days to build on speculation, he said.

Virginia Beach custom homebuilder The Walters Co. went the past six months without purchasing a single building permit, said Herb Watson, the company's president. During that time, the company focused on lots of renovation and home upgrades, he said.

"Not everybody wants to buy a new home, but a lot of people might to want to do something to their existing home," Watson said.

Things have picked up more recently on the new homes side for Watson's business, which is applying for three permits in the coming weeks, he said.

"The good weather seems to bring about some optimism," Watson said.

Josh Brown, (757) 446-2318, josh.brown@pilotonline.com