Despite a low number of housing permits issued earlier this year, the number of newly constructed houses in Connecticut, such as this recently built home at 2 Frederick Place in Clinton, has begun to increase.

At first glance, the almost 30 percent drop in the number of housing permits issued in February might be alarming, but homebuilders say the numbers are deceiving and they remain optimistic that the housing market will remain strong.

The state Department of Economic and Community Development has announced that Connecticut communities authorized 454 new housing units in February 2003, representing a 28.3 percent decrease compared to February of 2002 when 633 units were authorized.

The DECD also reported that the units permitted in February represent a 27.8 percent decrease from the 629 units permitted in January 2003. The year-to-date permits are down 12.2 percent from 1,234 through February of 2002 to 1,083 through February of this year.

Only the Stamford Labor Market Area showed an increase of housing units compared to a year ago. The remaining nine LMAs experienced losses. Westport led all Connecticut communities with 31 units, followed by North Haven with 20 and Southington with 13 units. The Stamford LMA is comprised of Darien, Greenwich, New Canaan, Norwalk, Stamford, Weston, Westport and Wilton.

From a county perspective, only Tolland County had a gain of units compared to a year ago, with 35 last year and 44 this year. The other counties all recorded losses, with Hartford County at the bottom of the pack with 180 units in February of last year and 90 this year.

Koli Chang, senior research analyst with the DECD, explained that the February numbers are down from January because of two large housing projects that offset the overall totals that month.

In January, a 109-unit complex was permitted in Hartford, as was a 90-unit complex in Darien.

“Those two big projects tipped the number, and that’s the reason why the numbers in February are so significantly down from January,” said Chang.

She remarked that Connecticut is following a national trend, citing that construction has plunged 11 percent nationally from a year ago, a further explanation for the somewhat low numbers in February.

“Another reason is that February just has bad weather, and the poor weather conditions dampened housing permits. I also believe that in this weak economy people are holding back and tightening their purse strings, cutting back on their spending,” she said.

Chang noted that land in Connecticut is getting scarce, and that currently developers are wary of putting up money for major projects in light of the current economy.

On a more optimistic note, she added, “We don’t know what the March numbers are going to be yet, but we’re hoping they will go up. Only time will tell.”

‘Eternal Optimists’

Homebuilders themselves aren’t concerned with the current housing permit numbers, saying that one month isn’t nearly enough of a barometer to judge the entire market.

“I think we cannot put too much credence in one or two months’ numbers. We’re not concerned with what these numbers from the DECD show, and there are a number of factors that still make the construction numbers strong, including the fact that our interest rates are at a 40-year low,” said Bill Ethier, executive vice president of the Home Builders Association of Connecticut.

“We had very severe weather in January and February, particularly here in Connecticut. This was weather we haven’t seen in seven or eight years, and it’s just not conducive to home construction,” said Ethier.

He added that because Connecticut is such a small state, with the entire state only having 454 housing permits issued, it’s very easy for one apartment complex to skew the numbers.

“We really like to see a series of months to put some credibility behind them,” said Ethier. “Because we’re so small, it’s very hard to put faith in just one month’s output.”

The Home Builders Association meets monthly to discuss issues in the industry, and Ethier noted that “everyone is very active; we’re all very busy. We’re expecting pretty much the same amount of activity as last year, and these current numbers are nothing to be concerned about.”

He noted that consumer confidence has slipped a little bit this year, and that is something that can weigh on a person’s decision to build a new house. Also, the job market has been impacted this year, adding more stress to the new construction market.

According to a report from the Connecticut Department of Labor, The newly released revised annual average data show that Connecticut non-farm employment declined for the second straight year in 2002 by 0.8 percent, or 13,300 jobs. In 2001, 12,100 jobs (-0.7 percent) were lost. Connecticut’s seasonally adjusted total non-farm employment, which peaked in July 2000, has been dropping steadily, and more precipitously beginning in the second half of last year.

The unemployment rate also rose another full percentage point to 4.3 percent in 2002, as the number of initial claims for unemployment increased further last year. The Hartford help-wanted index dropped for the fourth consecutive year to its lowest level in the last 13 years. Real personal income of Connecticut residents fell for the first time last year since 1991.

Despite the current conditions, the homebuilders have a positive attitude.

“We’re eternal optimists, and with interest rates remaining low I feel that as long as the state government doesn’t tax business, then the economy will turn around, jobs will turn around and things will pick up,” said Ethier, adding, “Builders are still very confident and optimistic.”

“Everything is on fire right now,” added Mike Sexton, manager of the Branford office of H. Pearce Real Estate. “The war is going well, the weather is turning around and people are really looking forward to getting into a new house. The towns that have building lots available are going like gangbusters, but that all just started happening.”