Through February, permits for single-family home construction were up 13.9% in the Valley from year-ago levels, according to a new survey by the residential research firm The Meyers Group. In Maricopa County, 5,158 new home permits were tallied during the first two months of the year, compared to 4,528 a year ago. Maricopa County is the most populous county in Arizona and encompasses Phoenix and most of its surrounding suburbs.

The optimism shown by the builders is not been reflected in the number of buyers, though. New home closings are off by 9.6% from the first two months of the year, according to The Meyers Group. There were 3,919 new home closing for January and February, compared to 4,337 during the same period in 2000. The point spread between permits and closing is nearly twice the size it was a year ago.

More construction than sales is an ugly trend that last reared it head in the late 1980s, when builders put up neighborhoods full of speculative homes that didn't sell for months. In some cases, entire master-planned communities lay fallow for years after the real estate crash in 1987.

But local housing analysts say that the trend isn't a result of over optimism by local builders, but rather as a result of two phenomena: more custom home construction and the normal time lapse between when the permit is pulled and the sale closes. Custom homes are permitted but don't show up on the closing counts.

Demand is there from buyers, says local housing analyst R.L. Brown. It would take a gap of 20% to 30% between permits and closings to show signs of overbuilding, Brown says.