Holding steady, moving forward; Utah's economy has slowed. But remains among nation's strongest.

• Author: Mischel, Marie
• Position: Special Report

The blistering pace that has characterized Utah's economy for the past few years has begun to cool, experts say. The national housing slump and high oil prices have both played a part in the slower pace, but the Beehive State remains at the head of the pack in significant areas such as home appreciation and job growth. Experts see the slowdown as part of the natural economic cycle and are cautiously optimistic that Utah will continue to attract companies looking to relocate, thus maintaining low unemployment and providing a stable local economy.

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YELLOW FLAGS

When the national housing market took a hit in 2007, Utah seemed unaffected at first. By the first of this year, however, home sales had dipped and the number of housing starts declined dramatically. In the first quarter of 2008, for example, home and condo sales in Utah were down 11 percent compared to the previous quarter while housing starts were down 60 percent.

Despite the negative number, that 11 percent decrease was an improvement over the fourth quarter of 2007, which showed a quarterly decrease of about 33 percent, according to the Utah Association of Realtors and it appears that picture will continue to brighten. In May, the Office of Federal Housing Enterprise Oversight reported that Utah showed a 5.58 percent change in housing prices in the first quarter of 2008 - the second highest home price appreciation in the nation.

"The housing market is still a little sluggish. We anticipate it will stay that way probably through the summer, but the third or fourth quarter should improve some," says David Mansell, president of the Utah Association of Realtors.

Like the housing trend, other national factors affect the local economy, says Kelly Matthews, executive vice president and economist for Wells Fargo. "The costs of food and energy are evident in terms of the Utah economy. We have not been immune. The Utah economy has slowed in its growth."

Matthews is almost as optimistic as Mansell about the duration of the housing decline, saying that he thinks the market is "probably at least halfway and maybe more than halfway through the adjustment process. We're not done yet. A lot of these homes are not sold yet [and] I think that home prices will still decline. I think by the end of this year we will have a significant reduction in the size of the housing overhang and, in fact, I think sometime this year we will actually start building a few more houses."

CURVES AHEAD

As with the housing market in 2005 and 2006, the state's unemployment and job growth rates accelerated at a record-setting pace. In the first half of this year, they've slowed down. The Department of Workforce Services...