Booming November Permits Keep State On
Pace For Busiest Year Since 1989
December 29, 2004
By KENNETH R. GOSSELIN, Courant Staff Writer
November's housing construction in
Connecticut was the strongest in 16 years, boosted by lower-than-expected
mortgage rates and weather warm enough to sink foundations.
And home building in the state this
year remains on a pace to exceed construction in 2003, perhaps by
as much as 20 percent.
If permits in December keep pace with
the first 11 months of the year, it would mark the busiest year
for home builders since 1989.
In November, the state's towns and
cities issued building permits for 1,297 single-family homes, apartment
units and condominiums. That was nearly 70 percent more than the
766 units that were approved for permits in the same month a year
ago, according to the state Department of Economic and Community
Economists said the strong showing
in November might mean less construction in the first three months
of 2005. But most still expect new-home construction to remain healthy
next year, though not increasing at 2004 levels.
What happens in the state's housing
industry - construction, sales and price appreciation - has been
well watched since the last recession. It has been an economic bright
spot in a state where job growth has lagged behind not only most
of New England, but also the rest of the nation.
"I'd hate to think what the Connecticut
economy would be without it," said Donald L. Klepper-Smith,
an economist at DataCore Partners in New Haven.
Through November, 10,956 building permits
were authorized, an increase of 19.7 percent from the first 11 months
of 2003, when 9,156 permits were issued.
Hartford County, where housing construction
has lagged behind most of the state's eight counties, might now
match the levels of 2003, thanks to stronger-than-expected permit
volume in November.
Builders broke ground on 291 units
in Hartford County - including 99 in South Windsor - in November,
more than double the 140 in November of 2003.
So far this year, Fairfield County
is the home building hot spot, with a 43.5 percent increase, compared
with the first 11 months of last year. After a slow start, New Haven
County is second, rising 31.6 percent, followed closely by New London
County, with a 29.7 percent gain.
Only Tolland County is showing a decline,
down 4.3 percent.
One driver behind the larger-than-expected
increase in November was lower-than-expected borrowing rates.
The popular 30-year, fixed-rate mortgage
has averaged well below 6 percent for most of this year, far lower
than many economists had expected. But more talk of rising rates
this fall may have spurred consumers to sign contracts to build
"The Federal Reserve has clearly
signaled that increases in rates are coming, and home buyers are
rushing to build while mortgage rates are still favorable,"
said Mark Prisloe, associate economist at the state economic development
In addition, developers of apartment
complexes and age-restricted communities also may have been prompted
to build now, Prisloe said.
Although the Fed's actions on short-term
rates don't directly affect mortgage rates, they do ripple into
the bond market. And mortgage rates closely track the 10-year Treasury
Economists studying housing permit
data consider that some towns and cities showing unusually large
spikes in permits may be authorizing apartment complexes. For each
unit of rental housing, a separate permit is issued.
That was the case in Meriden, the municipality
with the largest number of permits in November. Of 186 units authorized,
160 were in a large apartment complex.
But that wasn't what happened in Stamford,
which had the second-highest number of permits. The city issued
permits for 115 units, a mix of single-family homes and condominiums.
Permits are issued just before builders
break ground. They differ from projects approved by local planning
and zoning agencies that may or may not be built.
Reprinted with permission of the Hartford Courant.
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