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Residential builders in Oregon are facing a mid-year reality check as sales fall short of optimistic projections made at the beginning of 2011.

Many local builders say they’ve been forced to shift their business plans in response to the flagging numbers, and are turning to layoffs, lower construction projections, and adjusted design schemes to keep their companies afloat.

鈥淕enerally, 2011 hasn’t blown our socks off,鈥� said Brad Hosmar, chief operations officer at Beaverton-based Arbor Custom Homes. In January, Arbor had hoped to build 350 homes in 2011. The way it looks now, though, Hosmar thinks the number will end up closer to 250.

Nationally, residential construction is actually rising after several years of dismal numbers, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development announced last week. But the numbers are still relatively low, and the trend has not yet boosted builder or buyer confidence.

Still, builders are trying to focus on whatever silver linings they can find.

鈥淭he good news is that we’re still selling,鈥� Hosmar said. With 30 homes sold in May, Arbor’s home sales are slightly ahead of their 2010 pace. 鈥淲e had our best May in a couple of years.鈥�

If employment numbers improve, Hosmar hopes consumer confidence in home buying will follow.

鈥淭here’s just no confidence that now is a good time to buy,鈥� he said.

Builder confidence is also on the decline for the first time in six months, the National Association of Home Builders reported last week. For 20 years, the NAHB has been conducting a monthly survey gauging builder perceptions of current single-family home sales and future sales expectations. In June, every component on their survey fell.

鈥淭ypically, housing leads the way out of recessions, but this one just seems to go on and on and on,鈥� said Jim Chapman, president of Legend Homes. 鈥淲e haven’t seen the fear factor go away.鈥�

In a typical year, Legend Homes would be building more than 400 homes, but this year the company will be in the range of 65, Chapman said. The drop off in home sales led to a difficult round of layoffs at Legend, Chapman said. Eight people were recently laid off at Legend, leaving the company with a staff of 18.

鈥淲e kept people around consciously because we valued them, but the reality is that it may be a long time 鈥� two years or better 鈥� before we get back to the point where we need that level of staff,鈥� he said. 鈥淲e’ve been smaller in the past, and we’ll be bigger in the future at some point.鈥�

Legend’s most active property is the Villebois development of single-family homes in Wilsonville.

鈥淭here will always be people who would rather buy a new home than a used home, people who just don’t want someone else’s fingernail clippings in their carpet,鈥� Chapman said. 鈥淲e’re meeting a need. Right now there’s not much of a need, but that’s where we are.鈥�

Residential builders across the country are trying to come up with business plans that will accommodate the current market.

鈥淓ssentially what’s going on is that builders who are financially able to produce a product at a much lower price are still doing that at a bit of a profit. Those who don’t see opportunities to make any money when building have quit building houses. They’re either remodeling or taking time off,鈥� said Chapman. 鈥淲e have revalued our land so that we’re able to build homes that we can find a buyer for.鈥�

Arbor responded to the slow market by scaling down the amenities and square-footage of the homes they were building last year. But Hosmar said he has come to realize that even in a slow economy, his clients don’t want to buy smaller homes with more basic fixtures.

鈥淧eople are still willing to pay for quality, so we’ve added some of the base amenities back into our homes to offer a higher quality product, and that resonates,鈥� he said. 鈥淪o what we’re doing is actually larger in scale than the stuff we were doing last year.鈥�