SoundBuilt Homes’ billboard on Interstate 5 tells passing drivers how many dreams have been realized this year, how many people have purchased a new home.

But so far this year the number has been slow to change, with the faltering economy and credit crisis ensuring that there are fewer dreamers out there.

Bad news has been piling on the housing and real estate industries, and Puyallup’s SoundBuilt has been a testament to the turmoil. The home-building company has seen its staff fall from 110 to 30 in the past year and a half and the amount of homes built stumble to a couple of hundred less than in previous years – about 550 so far this year. The change has made the company leaner, owner Gary Racca said, but with banks loosening up on loans, he feels a turnaround is finally coming.

“As long as I have been in this, I have never seen” the economy this bad, Racca said. “And it’s not just the building industry, everything has been affected.

“I don’t care where you’re at, from 7-Elevens to hotels, it’s unreal. People are just not buying.”

BAD NEWS

Three different sets of large, orange SoundBuilt flags wave within a few miles of each other, each announcing a different development in south Puyallup. They are three of the newest of SoundBuilt’s 36 developments.

All of them have homes in construction, and on a recent afternoon only one had a few construction workers building homes. Another had a row of empty lots, houses sitting with a plywood exterior next to a few bare foundations.

“There are builders that are just not making money,” Racca said. “What I think, eventually, and I don’t know when, is it is just going to have to turn around.”

In the past few weeks, bad news for the industry kept coming out in the form of new studies and research. The U.S. Department of Housing and Urban Development and the U.S. Census Bureau announced last week that the construction of new homes fell to the second-lowest level in 50 years, with September housing starts at 31 percent below the September 2007 rate. Completed housing fell 20 percent from the previous year.

Credit ratings firm Fitch Ratings said the outlook for U.S. home builders is “negative,” with this year’s projected revenues down by about 40 percent on average. So, not surprisingly, the National Association of Home Builders/Wells Fargo Housing Market Index, an analysis of home-builder market confidence, fell to a record low.

“The impacts of the record-breaking housing contraction have spilled over to other key sectors of the economy and weighed heavily on financial markets, and stabilizing housing is now the best chance we have to limit the severity of recession,” NAHB chief economist David Seiders said.

OTHER HURTING AS WELL

The pain in the building industry also hit Wayne Mangan, sales manager at BMC West building supply in Lakewood. He doesn’t know whether his operation will make it another day without healthy builders.

“Without sales, nothing else we do matters,” he said. “Right now, we have a huge decline in sales because builders aren’t building near as many homes as we used to.”

That means he has to cut expenses, which included laying off about half of his employees, people he has known for decades.

“It’s very difficult, it’s a sad situation when you have to lay off people who had been in your company for 20 years,” he said. “Until housing starts appreciating, things aren’t going to get better.”

BMC West is one of the nation’s largest building supply chains, with operations in 12 states. Mangan’s Lakewood store sells to major builders in the Pierce County area, including SoundBuilt.

With builders having trouble selling homes, some have trouble paying their accounts. To their credit, Mangan said, local builders are doing everything they can to make their payments.

“They want to pay us, they want to do the right thing, but it’s hard when houses aren’t selling,” Mangan said. “Banks need to work with the builders and help them through this so we can all work this through together.”

Suppliers will struggle, and Mangan will not be able to hire back his employees until the industry changes, he said. But that may take awhile.

“Nothing’s changed,” he said. “In fact, in my opinion, for us as a supplier, it’s going to get worse before it gets better.”

HOPE FOR A TURNAROUND

The biggest problem for SoundBuilt recently is that banks will not approve most home-buyer loans. But the banks are starting to loosen up, Racca said. After last month’s bailout, he said, there has been some movement.

“It’s not over, there’s no doubt about it … (but) it’s very positive from what we’re seeing,” he said. “We’re getting sales.”

The market turmoil came right when SoundBuilt had dramatically expanded. Racca said the company had quadrupled in size, with staff rising up to more than 100. But as business slowed, the company was forced to cut back and lose more than 70 percent of the staff.

But, after all the damage, he is optimistic that things are turning. The company just had a hired a chief financial officer, and it is starting to build and sell, at least more than the past few months.

“I knew it would turn around, it’s just a matter of when,” Racca said. “We have done well over the years, made good decisions and put away money for bad times. And we’re lucky we did it.”

Brian Everstine: 253-597-8374