enlarge John Patriquin/Staff Photographer

Leo Davis cuts brick at Scarborough’s Dunstan Crossing condos. From January through Nov. 15, southern Maine builders took out 841 permits – about one-third as many as in the same period in 2000, when home building in the area peaked.

enlarge John Patriquin/Staff Photographer

Finish carpenter Kevin Cote checks the level of a doorjamb at Dunstan Crossing last week.

enlarge John Patriquin/Staff Photographer

Brick mason Jon Breton works on a set of front stairs at the 264-unit Dunstan Crossing condos in Scarborough. Developer Elliott Chamberlain says he’s benefiting from an energy spike that has people looking at smaller homes near stores and services.

HOUSING CYCLE:

BOOM TO BUST

Here are the numbers of housing starts in southern Maine each year from Jan. 1 through Nov. 15:

2008: 841

2007: 1,293

2006: 1,599

2005: 2,117

2004: 2,193

2003: 2,123

2002: 2,144

2001: 2,120

2000: 2,327

Source: Construction Data New England

Fewer new homes will be built in southern Maine this year than any time since at least 1991, figures show.

From January through Nov. 15, builders took out 841 permits in the 38 communities tracked by Construction Data New England. That's roughly a third as many as were filed for the same period in 2000, the peak year for homebuilding in the area, according to figures tallied by the firm for the Portland Press Herald/Maine Sunday Telegram.

The Windham-based company follows building permits for single-family homes and free-standing condominiums from Lewiston to Kittery.

The national recession, tight credit and the abundance of foreclosed and unsold homes already on the market have contributed to the sharp drop in new construction.

Downturns in homebuilding ripple through the economy. Besides the loss of construction jobs, a drop in housing starts hurts retailers who sell everything from appliances to furniture, and the manufacturers who make these products.

The magnitude of housing's impact on the overall economy was reflected in the Federal Reserve's newly announced plan to pump $800 billion into new lending programs, with most of it aimed at lowering mortgage rates to benefit homebuyers and generating new lending to prime the residential real state market.

ECHOES OF 1991 RECESSION

The Press Herald analysis shows the largest drop in permits taking place in Portland's western suburbs, from Bridgton to Westbrook. Housing starts there dropped 63 percent to 227 building permits obtained, compared with 615 for the same period in 2004.

Housing starts nationally plunged to a 50-year low in October, the Commerce Department reported recently. The previous record was set in 1991, in the midst of a stubborn recession.

That recession and the current downturn both followed a run-up in housing prices and building activity, according to Charles Colgan, a University of Maine economist who helps forecast economic trends for the region.

"The boom-bust cycle characterized both periods," he said.

A flow of residents who moved to Maine from southern New England during the first half of this decade, including a wave of retirees, helped boost the demand for new homes in Maine. That migration has largely dried up now, in part because owners elsewhere in New England are having trouble selling their homes.

The global financial crisis, meanwhile, has crimped credit and overall spending.

"The two things keeping housing starts up are essentially gone," Colgan said.

This trend hasn't caught the area's largest homebuilders by surprise. Most have been in business long enough to have weathered similar economic cycles.

To cope, some are redirecting marketing efforts to first-time buyers. These buyers may qualify for special bank financing, as well as government-subsidized programs, such as those offered by the Maine State Housing Authority.

"It's a tough market, and we're just tightening our belts," said Susan Duchaine, president of Design Dwellings Inc. of Gorham.

MOVE-UP MARKET HIT HARD

Belt tightening in the industry cut an estimated 1,200 construction jobs from Maine's economy in September, compared to a year ago, according to federal figures. Homebuilders typically retain key personnel and rely on subcontractors for specialized tasks. Duchaine said she hopes to avoid any layoffs among her core staff of nine.

Duchaine is more than midway through two small subdivisions aimed at the first-time market: Beechwood in Standish and Douglas Knoll in Gorham. The ranches and small capes in these projects range from $230,000 to $260,000.

The move-up market is in rougher shape, Duchaine said. Some people who bought homes five years ago also borrowed against the equity in their existing, less-expensive houses. Now the value of their homes has fallen, and they still owe money on those loans.

"They...