Valley builder production slowed dramatically in 2007, according to U. S. Department of Commerce statistics.

A total of 950 building permits for single-family homes were issued in November — a 50 percent drop from a year ago. Permit activity began to fall steadily in May, which saw 2,851 single-family permits pulled.

Production has also diminished throughout the country. In 2007, an estimated 1.4 million building permits were issued, a 25 percent fall from 2006.

Experts say the slowdown in new builds is a good sign — allowing builders to get rid of existing inventories and hopefully bringing supply and demand closer to a balance. But the outlook for 2008 is still dim.

Builder confidence remained near a record low for the fourth month in a row in January, according to a monthly housing market index. The credit crunch and excess home inventories are continuing to plague builders and sellers of existing homes alike.

The National Association of Home Builders/Wells Fargo Housing Market Index gauges builder perceptions of sales, sales expectation for the next six months and prospective buyer traffic.

Mortgage interest rates recently experienced their biggest two-week decline since May 1995 — dropping nearly half a percent since Christmas.

The average 30-year-fixed rate mortgage is currently 5.88 percent, down from 6.31 percent, according to Bankrate.com. That means a couple of weeks ago a$200,000 loan would have had a monthly payment of $1,239.25. Now, the same loan has a monthly payment of $1,183.71.

Bankrate says the drop is tied to falling home sales, weaker economic conditions and a disappointing national employment report.

According to the latest forecast from the National Association of Realtors,  sales of existing homes will hold steady in 2008 before rising later in the year and continuing to improve in 2009.

Meanwhile, the association’s pending sales index, which tracks contracts signed, fell 2.6 percent in November.

“Consumers continue to wait for additional signs of market stabilization,” said NAR senior economist Lawrence Yun.

That seems to be holding true in the Valley. Real estate agents report increased phone calls from potential buyers, but few are actually biting. Industry experts are looking to March, the usual start of the selling season, to get a read on which direction the market may head this year.

A new survey shows that 40 percent of Maricopa County residents polled believe housing values will decline in 2008.

The survey of 401 Valley residents also states that 33 percent expect prices to stay the same and 24 percent believe values will rise. Local firm WestGroup Research conducted the survey in November.

Results also showed that 55 percent of those surveyed thought home values in Arizona are “a little too high” or “much too high,” compared with 34 percent who considered prices “about right.” People with annual incomes less than $55,000 were significantly more likely than more affluent people to say values are “much too high.”

More than half of those surveyed also reported that the current housing market was not impacting their cost of living or budgeting, while 36 percent said it was having a “slightly negative” or “very negative” effect.