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Developers in Phoenix are scrambling to keep up with a newly frenzied demand for housing. This is helping to reverse a situation that started during the 2008 financial crisis, when builders abandoned suburban developments that were only half-completed. What came to be known as zombie subdivisions left a ring of unfinished construction around the city.

As Peter O'Dowd from member station KJZZ reports, the zombies are waking up.

PETER O'DOWD, BYLINE: When the housing party ended five years ago, the city was left to clean up the mess. Phoenix got millions in federal stimulus money, teamed up with builders and got to work.

(SOUNDBITE OF MACHINERY)

O'DOWD: That's why zombies like this one are coming back to life. A cement truck is pouring its payload into an unfinished driveway at Gordon Estates. Work crews are putting the final touches on 14 new homes that are just about move-in ready. The city's Chris Hallett says he's running out of foreclosed properties to resurrect.

CHRIS HALLETT: The inventory out there is slowing. That's a sign of a good economy, and that's a sign that our work here is just about done.

O'DOWD: The housing recovery in Phoenix is in full swing, and the supply of existing homes cannot keep up with buyer demand. In response, builders began snapping up empty lots late last year. The easiest targets were zombies already equipped with sewers and streetlights.

DAVE EVERSON: The opportunity to acquire distressed lots or failed communities is long gone.

O'DOWD: Dave Everson is the president of Mandalay Homes, the company that helped finish off Gordon Estates.

EVERSON: They're now in the hands of people that are either building them, or are in the process of getting started to build them.

O'DOWD: Everson himself has bought up half a dozen distressed subdivisions, and he has reason to be optimistic about their future. The number of new home sales in April was up 27 percent compared to the year before. During the recession, builders recalibrated. They drew smaller floor plans, cut back on fancy amenities and designed denser neighborhoods.

EVERSON: As an industry, we tooled up for that. But what we are finding is as the market's healing, we probably underestimate consumers' desire for a little bit larger home.

O'DOWD: Actually, about 30 percent larger.

MIKE ORR: Between the average size of a new home and the average size of a resale. So I think that's significant.

O'DOWD: Mike Orr is a housing researcher at Arizona State University. He says the extra space has something to do with parents who need bigger houses to accommodate their unemployed adult children. But more likely, it's just industry picking up where it left off.

ORR: I think the city planners would like to have much denser city centers, with tall buildings. But the builders know how to make money doing it the old way, going out on the outer fringes.

O'DOWD: On the outer fringes of West Phoenix is where I met realtor Greg Swann. Back in 2011, we found a zombie neighborhood with fire hydrants emerging dolefully from the desert floor and sidewalks leading to nowhere.

GREG SWANN: When you recover from a heart attack, it takes time. Two years ago, we stood in this same subdivision, and there was absolutely nothing going on. And what do you seen now?

O'DOWD: Almost nothing.

Almost, because today, we do find crews working on about a dozen big homes, but Swann says it's not much to brag about.

SWANN: And this year is definitely better than two years ago. But there are limits to the enthusiasm that you can express for this.

O'DOWD: Across the region, about 350 subdivisions are actively selling new homes. In a normal market, that number is more than 600. Swann says when things are really moving in this city, you'll know it.

SWANN: If there's a truss on a truck in front of you everyday when you're driving on the freeway, if you're trying to angle around that truss because you can't see, then they're building houses.

O'DOWD: And if those trucks are not a problem, Swann says construction is not as it should be.

For NPR News, I'm Peter O'Dowd, in Phoenix.

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