Quadrant Homes, Washington's largest homebuilder, is increasing production in response to increased sales. The state's largest homebuilder says it's stepping up construction for the first time since the real-estate market collapsed in response to an uptick in new-home sales.

Quadrant Homes last month increased total production at its 14 developments in the Puget Sound area from two completed houses per workday to three, President Peter Orser said Monday.

That's still way down from the seven homes a day Quadrant was building in late 2007.

"But at least it's moving in the right direction," said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.

Quadrant's move also is consistent with national trends, he added: The Bellevue company's disclosure came the same day the Commerce Department reported new-home sales nationally increased 11 percent in June, the biggest monthly increase in more than eight years.

Some economists called it a sign the housing market has bottomed out.

"There are a few faint stirrings of life out in the marketplace," said Bill Hurme, president of new-home marketing firm Team Builder JLS. "Quadrant is the 800-pound gorilla in this market. Maybe they'll be the leaders, and the rest of us will follow along."

Orser said Quadrant generally doesn't start building houses until they are presold. He wouldn't provide sales figures, but said presales improved enough starting this spring to justify the production boost.

He attributed the sales increase to reduced prices; low mortgage-interest rates; Quadrant homebuyer incentives; and the new $8,000 federal income-tax credit for first-time buyers.

More than 85 percent of Quadrant's buyers during the first six months of this year were first-timers, Orser said.

They paid an average $277,000, and 78 percent paid between $200,000 and $300,000.

Quadrant now will have 162 houses under construction at its developments in King, Snohomish, Pierce, Kitsap, Thurston and Skagit counties on any given day — up from 108.

The increase should be good news for construction workers, hit hard by the housing meltdown.

The state Department of Employment Security reported this month that the number of residential-construction jobs in Washington dropped 23 percent between June 2008 and June 2009.

Some of Quadrant's subcontractors are hiring in response to the production boost, Orser said.

For example, Quadrant now will require an additional seven or eight framing crews of two to four workers each.

While he wouldn't provide specifics, Orser said Quadrant's price reductions generally have tracked the broader market.

The median sale price of a single-family home in King County has declined 18 percent over the past two years, according to the Northwest Multiple Listing Service.

Hurme, the marketing-firm president, said a shortage of lower-priced new houses may be starting to develop, especially in Snohomish County. Two of his builder clients there recently presold homes for the first time in 18 months, he said.

More developers would like to build lower-priced houses, Hurme said, but can't because they paid high prices for land.

At least two larger Seattle-area homebuilders — Conner Homes and Sound Built Homes — have lost King County developments to foreclosure this year.

Orser said sales at Quadrant's six projects in Skagit, Kitsap and Thurston counties are doing well, despite their distance from the region's major job centers.

Many buyers still are choosing to commute longer distances in return for more-affordable houses, he said.

Orser said he supports greater urban density. "But suburban single-family is still not only viable, it's being demanded by the marketplace," he said.

Quadrant stopped building and selling homes late last year at a 120-lot subdivision in Gig Harbor, in part because of slow sales. That project remains on hold, Orser said.

Source: The Seattle Times, July 28, 2009