by Calculated Risk on 5/19/2006 10:39:00 AM

The Arizona Republic reports: Housing decline triggers layoffs

Home builders are laying off construction superintendents, subdivision sales agents, finance specialists and other employees, a telling sign that metropolitan Phoenix's new-home market has taken a radical turn from last year's selling frenzy.

Builders are struggling with reduced demand brought on by skeptical buyers hit with higher prices and rising interest rates. The pileup of unsold houses helped push Valley home building down nearly 24 percent in March and more than 16 percent in the first quarter, following a record 2005.

Many of these jobs are relatively high paying with skills that do not transfer easily to other high paying jobs. So these people might have to sell their homes too, putting even more pressure on the Phoenix housing market.

The Phoenix economy is especially vulnerable to a housing slowdown:

Housing is the Valley's biggest industry. At least one of every $3 in the area's economy is generated by housing, according to Republic research. A downturn in home building will be felt throughout the state's economy.