Residential real estate sales dipped only slightly in Spokane County in the first five months of 2007, defying forecasts of a more rapid slowdown, while home sales in Kootenai County fell well off their pace, according to industry reports.


The Spokane Association of Realtors Multiple Listing Service market activity report says 2,641 homes sold in Spokane County in the first five months of 2007, down just 2 percent from 2,697 home sales in the year-earlier period.


The continued relatively strong sales in Spokane County were a better performance than some had anticipated, especially as new-home construction appears to be slowing down.


Weve had five years of unprecedented sales, says Vic Plese, a broker at Plese Realty LLC, of Spokane. We cant expect it to keep up forever.


While sales were relatively steady, the number of homes for sale increased substantially, and the market may be reaching a new balance point, Plese says.


The May MLS report included 2,756 listings, up 40 percent from 1,971 listings in May 2006. Plese says the May 2007 number is a much more normal level than the lower inventory figures seen in recent years.


It actually balances supply and demand, he says. In the last few years, supply was down, and demand was high. That was pushing prices, perhaps over where they should have been.


Sales of new homes are well behind last years pace in Spokane County, with resales of homes making up most of the difference, the MLS report says. Through May, 463 new homes were sold through the MLS, down 14 percent from 537 new-home sales in the year-earlier period.


Corey Condron, vice president of Condron Construction Inc., a longtime Spokane-based home builder, says the slowdown in new-home sales is even more pronounced for him.


Im down 45 to 50 percent, he says. Im nervous.


The rising cost of land and construction materials might be partly to blame, he says.


A standard new-construction home is $200,000, Condron says. Five years ago, it was $160,000.


In the MLS report, the median home-sale price through May in Spokane County was $185,000, compared with $165,000 in the first five months of 2006.


Condron says Spokane Countys inventory of new homes might be on the rise now that completed new homes are taking longer to sell than they did previously.


At any given time, Condron Construction builds about 25 homes on speculation, he explains, adding, Usually, we have 20 homes under construction and five ready to sell. Now, the inventory is still 25 homes, but 15 of them are completed.


Through April, the last month for which the city of Spokanes complete activity reports are available, the city so far this year had issued building permits for 181 housing units, including single-family homes, duplexes, and apartments, down 18 percent from 221 units in the first four months of 2006. The valuation of permits issued for new housing units through April 2007 was $35.5 million, down $5.6 million, or almost 14 percent, from $41 million in valuation in the year-earlier period.


Meanwhile, Spokane County had issued building permits through May for 533 housing units valued at $73.2 million, down from 588 permits valued at $94 million in the year-earlier period.


The city of Spokane Valley issued 245 new housing permits in the first five months of 2007, down from 274 permits in the year-earlier period. The valuation of this years permits, though, was $26.7 million, up from $24.7 million.


Randy Barcus, chief economist at Spokane-based Avista Corp., says the issuing of permits for new dwelling units slowed dramatically beginning last September, but has picked back up since February.


Theres no dearth of building, he says. Its just plateaued at a new level.


He says new-home construction in Spokane and Kootenai counties is still well ahead of what the typical annual pace was in the decade preceding 2004.


So far this year, in the two counties combined, were already at the level for the whole year of 1997, he says.


Nevertheless, Kootenai County has endured a much bigger decline in home sales in the last six months than Spokane County.


Some 1,443 homes sold there from December 2006 through May 2007, down 24 percent from the year-earlier period, the Coeur dAlene Association of Realtors says in its MLS report. Thats the lowest December-through-May sales number in the North Idaho county in five years.


Rob Higgins, executive vice president of the Spokane Association of Realtors, says North Idaho saw booming growth from 2004 to 2006, but is more susceptible to fluctuations in sales and prices in part because its a smaller market than Spokane.


Spokane is larger and isnt going to be impacted as much by swings in the market, he says. It doesnt usually have a boom or bust.


Meanwhile, the statewide residential real estate market in Washington was down in the first quarter by about 8.5 percent from the year-earlier period, but is still outperforming other markets in the country, says Glenn Crellin, director of the Washington Center for Real Estate Research, at Washington State University.


Spokane County, he adds, is outperforming most of the rest of Washington state.


My perception is Spokane is doing better than Western Washington, he says. Housing is clearly much more affordable, and Spokane has been showing strong job performance.


He says resales of homes might stay strong at the expense of new-home sales.


In general, newly constructed homes are larger and have more amenities than existing homes, he says. That makes them more expensive.


The increased inventory of homes on the market is giving buyers a chance to be more selective, Crellin says. The marketplace is beginning to be more favorable to buyers than sellers, he says.


Crellin adds that the market can stand a bit of a slowdown.


Weve been operating at record levels, he says. We can back off and still have whats characterized as a strong market.


Contact Mike McLean at (509) 344-1266 or via e-mail at [email protected].