MOUNT VERNON — Ohio is being hit hard by a nationwide drop in new home construction, according to a spokesman from the Ohio Homebuilders Association. And this trend is being felt in Knox County.

Vince Squillance, spokesman for the Ohio Homebuilders Association, said the general nationwide decrease in new home construction has been steeper in Ohio.

“Housing starts is a reflection of the vibrancy of the economy,” he said. “Our low number of starts supports the fact that Ohio’s economy is struggling.”

In late September, the U.S. Commerce Department reported that new home sales nationwide had dropped by 8.3 percent from July to August and had fallen to the lowest level in seven years. The median sales price fell 7.5 percent from a year ago to $225,700, the largest percentage drop in nearly 37 years.

Squillance estimates the number of new starts in Ohio for 2007 at about 30,200, compared to 37,500 in 2006 and 48,400 in 2005. He said anything less than 40,000 is a depressed level of housing starts and added that the normally vibrant home construction market in central Ohio and Columbus has decreased, following a long-standing trend seen in the Cleveland market.

“Many of our members will tell you the reasons they are stuck with the inventory they have today is that people who want to buy a new home can’t sell the homes they’re in now,” Squillance said. “There is a glut of inventory because of overbuilding. It’s not all due to rising foreclosure rates. The underlying story is the state’s weakening economy.”

He said Michigan has also experienced a huge decline in housing starts, compared to the rest of the nation. Squillance added that the association predicts an upswing in new home starts in 2008 — about 35,400.

According to Ron Simpson, interim director of the department, there have been 31 new service connections approved so far this year, compared to 100 in 2006 and 115 in 2005.

Brian Benick of the Knox County Health Department reports that site evaluations for new homes, which he said is the most indicative statistic available for new home construction, has declined in recent years as well. The department has done 39 evaluations so far this year, compared to 237 for all of last year and 218 in 2005.

Danny Stephens, owner of Danny Stephens Construction Inc. of Mount Vernon, said new home starts have dropped locally and a lot of builders have stopped building. He said his company, which also does remodeling and concrete work, built a total of six new homes this year, compared to five in 2006 and 28 in 2005.

“The market is in an adjustment period right now,” he said. “I don’t think the world’s coming to an end. There will always be a market here. Central Ohio has a strong transportation system and has a lot of good things going for it.”

He said he thinks some would-be homebuyers are opting to buy an existing home rather than to have a new one built, but added that a certain number of people who have the money are still having homes built.

“Certain groups can afford to build what they want. There’s still quite a bit of large construction,” he said. “The market is in adjustment right now. I don’t think the world’s coming to an end. I think there will always be a building market in central Ohio.”

He said a relative lack of factory jobs, predatory lending and easy credit have helped contribute to some of the problems in the residential construction market. Stephens also said the Federal Reserve’s recent lowering of interest rates should enable more people to get loans for remodeling and new home construction.

Nathan Witcraft, owner of Natecraft Construction of Mount Vernon, said he had plans to build two new homes at the beginning of this year but those plans have been put on hold because of market conditions. He also said a lack of good jobs in the local economy coupled with tightening lending standards are two main causes for the drop in new home construction.

“I think buyers are afraid to build a new house,” he said. “Anyone who knows real estate knows home prices are depreciating right now, and depreciating heavily. It’s bad but at the same time it’s good because a recession like this brings things back down to where they should be.”

Witcraft said a home could already have depreciated in value by the time it is completed and it could take two or three years to recover the building costs. He said some who want a new home are waiting for the market to stabilize, even if home values are not increasing.

“In a market like this, people are tight with their money, and they have to be,” he said.