Analysts say the Valley's homebuilding frenzy is cooling, leaving more than 800 homes on the market last month -- more than at any time in the last 10 years.

New home construction slowed this year, probably due to "a temporary oversupply" of homes built in 2004 and 2005, according to a Matanuska-Susitna Borough housing market analysis released last week.

The slowdown also stemmed from rising mortgage interest rates that put off buyers, as well as higher construction costs for builders, according to the analysis by borough economic development director Dave Hanson.

As a result, observers say, the Valley's housing market this summer boasts a glut of new homes between $250,000 and $350,000, good news for anybody looking to buy in that range.

But people who can't afford the payments on a half-million-dollar house aren't celebrating.

Valley buyers looking for bargains aren't having much luck right now, said Maurine Holland, Wasilla branch manager for Residential Mortgage. Asking prices aren't dropping by much in spite of the oversupply, parcels seem to be getting smaller, and mortgage interest rates continue to rise.

"The biggest problem is finding homes for these kids who have young families," Holland said. "You get a young couple out here, they're looking at a $300,000 house. It may be the house that fits them, but they can't afford that."

Amberly Breja and her husband had planned to buy a house by now. Instead, they're paying her parents $400 a month in rent while they wait for the right fixer-upper to come along. Breja, 23, teaches piano and voice lessons. Her husband, who is 24, works at Home Depot.

"There was nothing under the $189,000 mark that was of any value really that didn't have huge renovations," Breja said.

Some builders, however, say they are dropping their prices to move homes more quickly.

Builder Sheirwin Caldwell dropped the price on a "250-something" home in her Tundra Rose Estates subdivision on Knik-Goose Bay Road to $245,000 two months ago when the home didn't sell.

Her company's average home price now is now around $180,000 to $200,000, Caldwell said.

"What I've been seeing is people who qualify for $250,000 don't want that (mortgage) payment, but they'll still try to get absolutely as much as they can for $180,000," she said.

The building slowdown follows a period of go-go construction that peaked in 2004, according to the borough assessor's office.

The assessor counted 1,596 homes built that year, up from 1,143 in 2003 and back down to 1,251 in 2005. The borough also logged a 32 percent increase in contractors filing for business licenses in the peak period, according to Hanson's report.

The result: a decade-high 834 homes listed with Alaska Multiple Listing Service in June with a highest-ever average price in the borough of $275,000.

The oversupply trend also applies to condominiums and multifamily dwellings, which continue to rise in number and price, according to the report. The number of condos in the borough went from one in 2004 to 77 this year. Multifamily units -- often owned by investors -- went from 16 in 2004 to 53 this year.

Contractors and real estate agents voiced mixed opinions about talk of a cooling real estate market in an Alaska Journal of Commerce article earlier this month. Some acknowledged a slowdown, while others said they've noticed no overbuilding.

Overall, Hanson said, the economy is healthy, buoyed by high oil prices, and could be healthier yet if prospects for a new prison in the Valley materialize.

"We're going through an adjustment phase," he said. "Even with an average (population) expansion of 5 percent a year, if you increase the number of houses on the market by 70 percent, it's going to take a year or so to balance out."

Daily News reporter Zaz Hollander can be reached at zhollander@adn.com or 352-6711.