By BRIAN PEARSON
Business Editor

In the Cumberland Gap subdivision on a street without a sign, two empty houses, one of them marked for sale, sit alone in a landscape of cleared, homeless lots.

Erosion barriers and green, ground-level transformers punctuate the exposed orange earth in a setting void of the sounds of hammer and saw.

The scenery illustrates a slowdown in the Tyler-area home-building industry.

But it also underscores something else: that there are plenty of homes on the market.

The rich inventory combined with rock-bottom mortgage rates have created a historic buyer's market, according to one local Realtor.

"It speaks for itself," said Ann Fitzgerald, president of the Tyler Area Realtors Association. "It's a buyer's market.

"I've been doing this for almost 30 years, and I promise you between the prices, the inventory and the interest rate, I have not seen a better time to buy. Buyers have a tremendous selection, and they do have tremendous prices."

It was the slowest May in six years for Tyler-area home sales, according to association figures.

A month that historically is among the year's strongest saw just 216 units sold, down from 221 the previous month and 231 in March. It also marked a 37 percent decline from the 345 homes sold in May 2008.

But inventory, mortgage rates and prices have begun to lure potential home buyers off the fence, Ms. Fitzgerald said.

In fact, June is shaping up to be a normal sales month, based on preliminary figures, she said.

"I do think people are figuring it out," she said. "Our sales are looking much, much better for the month of June. We're not quite where we were last year, but we're within 20 units. I think some folks are coming off the fence."

While rates on a 30-year fixed mortgage are up after dipping below 5 percent earlier this year, they still are relatively low.

According to www.bank-rate.com, rates were averaging 5.38 percent Thursday, down from the previous week's 5.56 percent.

The Tyler area has one of the biggest selections in the state when it comes to home inventory, according to Real Estate Center at Texas A&M University figures.

The Tyler area's inventory for May was at 12.5 months, the highest since July 1998's 12.7 percent, according to Real Estate Center figures.

The center bases its home-inventory figure on the past year's sales rate and how long it would take to sell all the existing homes on the market.

The area's home inventory has been rising steadily since January 2007, when the figure was 7.7 months. The May figure marked a sharp increase from 11.7 months in April and 11 months in March.

Jim Gaines, a Real Estate Center researcher, said the high inventory of homes here indicates some pain in the construction industry.

Gaines said an inventory figure of between six and 6.5 months indicates a balanced market.

"Your supply is roughly double what it needs to be relative to the demand, the number of homes being sold," he said. "Generally when you hit this kind of situation, you'll find prices going down. Buyers can say, 'Hey if you're not going to give me my price, I'm going to go down the street and buy something else.'"

The inventory of homes on the market, however, has yet to translate into a price drop, according to First American CoreLogic, which tracks home trends nationwide.

In April, home prices increased 0.77 percent compared with the same month last year. The previous month it showed a 0.11 percent increase from March 2008.

Statewide, home prices increased 1.94 percent in April compared with the same month last year. But nationally, prices took a big hit, dropping 10.21 percent.

Nancy Barron, Tyler Area Builder's Association president, said that while residential construction has slowed, there have been recent signs that interest in new homes has picked up.

Ms. Barron attributed some of that to attendance at the TABA's recent Parade of Homes event.

"Tyler is not overbuilt," she said. "We've got a lot of people coming in with the health industry and the education industry. I think we have a lot of things on the market. They're moving slow, but they're moving."

She said work for builders has been slow, with a lot of focus on remodeling.

"We want to be encouraging to everyone that we're not throwing up our hands and running around," she said.

"We've noticed an increase in calls for remodels and new construction. We are not booming, but we're holding our heads above water," Ms. Barron said.

Tyler area residential contracts slipped during the first five months of this year, falling 55 percent to $29.9 million from the $66.6 million for the same period last year, according to the New York-based McGraw-Hill Construction.

Non-residential contracts grew to $83.9 million, up from $32.8 million for the first five months of 2008.

Total construction contracts in the Tyler area fell 79 percent in May compared with May 2008. There was $8.2 million worth of contracts last month, compared with $39.4 million in May 2008.

Residential contracts fell 76 percent, slipping to $8.2 million from $39.4 million. Non-residential contracts, at only $1.4 million, took the biggest hit, down 87 percent from $11.1 million in May 2008.

Non-residential contracts include commercial, manufacturing, educational, religious, administrative, recreational, hotel, dormitory and other buildings.

The silver nail in the construction rubble came with total contracts for the year, up 14 percent for the first five months compared with the same 2008 period, thanks to non-residential contracts.

Total construction grew to $113.8 million, up from $99.4 million for that period.

Statewide, contracts were down 45 percent from January through May, slumping to $16.4 billion from $30 billion.