Brad Nichols, center, a carpenter with Culbertson Construction, works Thursday to secure wall supports of a home that he and his coworkers are building on Tucker Trail in northwest Lawrence. Home construction numbers in Lawrence are down, corresponding with a national trend. U.S. housing starts have reached a 10-year low, according to a federal report released Thursday.

Tim Stultz, who builds homes for a living, watches as three big economic indicators – inflation, unemployment and mortgage interest rates – continue hovering at traditionally low levels.

Now, more than ever, he’s left wondering why the city’s long resilient home-construction industry has skidded to a career-long low.

“Since I’ve been building this is the slowest I’ve seen it,” said Stultz, president of Highland Construction since 1991. “But we ought to be coming out of it – if people would just believe we’re going to come out of it.

“Statistically, we’re in a good market. People just need to believe it.”

This week, two reports assigned gloomy numbers to the nationwide slide:

• The Commerce Department said Thursday that construction of new homes nationwide dropped 6.1 percent last month to a seasonally adjusted rate of 1.38 million units, down 20.9 percent from the pace a year earlier and the slowest rate in more than a decade.
• The National Association of Home Builders reported Wednesday that its barometer of builder confidence dipped by 2 points to 22 in early August, the lowest reading since January 1991, when the country was gripped by another housing downturn.

In Lawrence, people who follow the industry are finding themselves in unfamiliar territory. City Hall issued six permits for new single-family homes in July, the lowest in years and the latest in a string of declines that builders and those who depend on them are unaccustomed to.

“From 1990 to 2005, things were pretty much up, up, up, up, up,” said Barry Walthall, building safety manager for the city’s Planning and Development Services Department, which issues permits. “Over the past year, I can’t make that claim. The numbers are obviously down.”

For the past 12 months ending in July, the city issued 186 such permits, down 37 percent from the same period a year earlier and off 41 percent from a peak of 313 permits in 2003.

The decline affects more than builders. According to the Lawrence Home Builders Association, the number of homes built last year pumped $45.3 million into the Lawrence economy, through wages, materials purchases and spending in shops such as fuel stations, restaurants and dozens more.

Bobbie Flory, the association’s executive director, said area builders normally could weather national dips in the housing industry because Lawrence’s demand rarely sagged. But with builders having moved aggressively to meet market needs in recent years, they’re finding that they have plenty of excess inventory on their hands.

“There’s a correction being made,” she said. “We’re not adding fuel to the fire by continuing to build despite what’s going on in the economy. What you’re seeing – both in Lawrence and nationally – is that builders are responding. :

“They need to sell some of this inventory before we start adding back to it.”

Even as consumer confidence wanes, the stock market drops, credit concerns persist and the financial effects of subprime lending spread, Stultz finds reasons to be optimistic.

Lawrence’s construction activity has dropped, in part, because some builders have shifted their attention to work in fast-growing Junction City, he said. And buyers are starting to understand that values are out there to be found.

“It’s the best time to buy in forever,” Stultz said. “I think we’re through the rough times, and we’ll be climbing the peak again pretty soon.”