The number of Connecticut housing permits issued in January took a slight dip from the year before, but 2005 overall has so far been a great year for new-home construction in the state, according to a Guilford real estate agent.

“I think [the decrease] is more timing,” said Cash Mitchell, vice president of North Haven-based H. Pearce Real Estate Co. and the Guilford office manager. “The [housing] market is pretty darn good here.”

The state saw a 9 percent decrease in the number of housing permits issued by cities and towns in January, compared to January 2004, according to the state Department of Economic and Community Development, which tracks the number of permits issued. There were 627 housing units authorized in January, compared with 689 a year ago.

The number was also a decrease from the permits issued in December of last year. There were 1,002 issued in that month.

Most Connecticut counties saw a decrease, with the exception of New London County. Its cities and towns authorized 175 new housing units two months ago, compared with 46 authorized in January 2004. That is an increase of 280 percent.

The New London County towns of Norwich and Groton led the state in new permits, with Norwich issuing 80 in January and Groton issuing 69. The Fairfield County town of Danbury followed, issuing 29 permits.

‘Right Into the Sky’

The state’s overall decrease in housing permits isn’t evident to those who keep track of new construction. Although winter is still in full force, there is a lot of actual construction happening, Mitchell said.

“It’s a new year and it’s getting off to a really good start,” he said. “We expect a very vibrant spring.”

Mitchell expects the amount of new construction in 2005 to be similar to years past. Demand remains high and is helping to push costs up, with labor and materials becoming more expensive. Land also continues to appreciate.

“The cost of land has just gone right into the sky,” Mitchell said.

As a result, new homes are priced out of many homebuyers’ price range. The high cost of land means that developers have to build large houses to profit from their projects, a trend that leaves many first-time homebuyers who are looking for a new home out in the cold. Years ago, many first-time homebuyers could afford new construction by buying a small home and adding to it in later years.

“That sort of thing existed,” Mitchell said.

But that trend isn’t as common – or even possible to find – today.

“No builder is doing that these days,” he said.

Most new homes in Greater New Haven are large, custom homes, Mitchell said. In towns like Madison, the median price of a single-family home is well above $400,000, leaving new homes out of many people’s price range.

The trend likely won’t change this year, according to Mitchell, who said he expects 2005 to be a strong year, like the past two. Historically, there has been constant, steady appreciation in Mitchell’s area, and he said he doesn’t expect that to change anytime soon.

But the market goes in cycles, and a correction is a possibility in the future. If one appears, such as the one that occurred in the late 1980s, it won’t necessarily be bad for the market, Mitchell said. But it probably won’t appear soon.

“We do not feel – at least in the near future – that the end [of the strong market] is here,” he said.