The market for new homes continues to be mired in its worst contraction since record-keeping began in the early 1960s. Among the reasons: competition from lower-price resales, especially short sales and foreclosures; tight credit for builders and buyers; and high unemployment.

Yet from time to time, bright spots emerge, perhaps contributing to a growing builder confidence nationally, as reflected in Wednesday's report by the National Association of Home Builders.

That boost in confidence is "evidence that well-qualified buyers in select areas are being tempted back into the market by today's extremely favorable mortgage rates and prices," said David Crowe, chief economist for the builders group.

Bruce Paparone, president of the South Jersey company that bears his name, appears to have found a particular bright spot in recent months: small infill projects in high-profile markets - Washington Township, Cherry Hill, and Mount Laurel, for a start.

"These are not workouts," Paparone said, using the industry term for troubled projects in which the lender pays another developer to finish the job. These are market-rate projects, he said, although at prices today's market will accommodate.

As Paparone explains it: "We are picking up opportunities in infill locations, and sales are on fire."

That's what happened at the Reserve at Deerfield in Washington Township, where he acquired the last five home sites in a cul-de-sac from Group Ten Builders earlier this year.

Group Ten had picked up eight sites from another developer and had built and closed on three, the last just as Paparone was acquiring the rest.

"It was a development with which we were familiar, since our houses already surround it," said Paparone, stressing the importance of knowing a market before plunging in.

Group Ten, like many builders, "is a good company that just couldn't make it" when the economy turned, Paparone said. But he couldn't simply step in and pick up the pieces.

"You have to get the lender to agree to sell at a market-rate number not below market, but below the price at the height of the market," he said. "It takes a long time for the sellers [the current developer] and the lenders to converge before they are willing to let things go - often a couple of years."

Paparone sold the five houses Group Ten would have priced at $700,000 to $800,000 for $450,000 to $600,000, including the custom changes that buyers of the lots ordered.

The buyers - one told Paparone she had tried for years to purchase the lot she chose - were in their 30s to early 40s, people who were able to sell homes nearby and were moving up. And Paparone knew there were enough of this type of buyer in this part of Gloucester County to pull it all off.

Though the median home-resale price in Washington Township has fallen 16 percent since peaking at $245,000 in 2007, a recent Inquirer survey of home prices showed, Gloucester County as a whole experienced a building boom from the late 1990s until 2007 and has had fewer foreclosures than Camden and Burlington Counties.

"People are looking for value today, and if you can deliver it, you'll sell houses," Paparone said. Lower price points allow this market segment to add playrooms and in-law suites to his models.

"Every one of these buyers has a different situation, and wants the house to accommodate it," he said. Thus, his in-law suites can be large or small, have a separate entrance or not.

Similar infill opportunities are popping up all the time, Paparone said, and his company is poised to take advantage of them, unlike some others.

Residential builders here and nationwide complain that most lenders are not eager to finance new projects with so many still unsold. Paparone said he can acquire infill projects without lenders kicking in more money.

"My father [Samuel Paparone] was conservative, and when we'd look at things, we'd imagine a worst-case scenario," he said.

In 2003 up to 2005, land prices started to skyrocket, and the home builder realized that the costs didn't jibe with home prices.

"We obviously had to buy some ground, but bought less so we could lower our debt load," Paparone said. "When the market crash occurred, we did not have a lot of debt."

Other builders were expanding, "taking on a mountain of debt," he said, "but with slower sales, they couldn't carry the load and didn't make it."

Now, in a better position than most, Paparone said, he can have "other projects in the wings, waiting for the approval process to get them to market," and work on the smaller infill developments.

Each infill opportunity is slightly different, he said. At Ryan's Cove in Mount Laurel, Paparone has partnered with the original developer, Guy Giordano, to complete nine of 11 remaining houses. At Deptford Chase, Paparone has the remaining four of eight.

He also is negotiating to take over projects in Mansfield and Woolwich, he said.

One that brought a smile to his face as he talked about it recently is the five-home project at Nine Acre Court at Country Walk, near Kresson and Cropwell Roads in Cherry Hill.

That's the project he and his 84-year-old uncle, Dominic Paparone - "the patriarch," Bruce called him - are working on together.

The elder Paparone built Country Walk in the 1980s, and the cul-de-sac with the remaining lots is where Dominic has lived for the last 24 years, Bruce said.

"It has always been set up to do this," he said, adding that four of the five have been sold at prices around $600,000 - in a town where the median price of a resale is $230,000.

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Contact real estate writer Alan J. Heavens at 215-854-2472, aheavens@phillynews.com, or @alheavens at Twitter.