Last month's dramatic drop in building permits for homes across metropolitan Phoenix is actually a good sign, as new home sales hold steady.

There were 1,391 single-family permits issued from Casa Grande to north Peoria in September, while new-home sales or closings were more than double permits for the month at 2,991.

The result of the two market indicators should mean fewer speculative-built houses staying on the market unsold. RL Brown, publisher of the Phoenix Housing Market Letter, estimates there are 6,000 to 8,000 spec homes in the Valley now. That compares with an estimated 15,000 to 20,000 spec homes sitting idle and empty earlier this year.

The number of existing homes for sale still remains high with listings about mid-50,000s. Resales continued their slide in September, as did the median price of existing homes sold.

Lower prices are helping the new-home market now. Brown said most Valley builders finally have realized they need to drop prices to sell homes. Instead of offering the hefty incentives of last year, many builders have cut base prices and are now offering smaller homes with fewer amenities to attract buyers. It appears to be working.

Source: http://www.azcentral.com/arizonarepublic/ business/articles/1028biz-catherine1028.html