BARRY ROSA – Numbers skewed

The pace of new-home construction across the country was down almost 20 percent after August showed slower housing starts. The trend seemed to be echoed somewhat in Connecticut, where the number of permits issued from January to July dropped by 13 percent from the number of permits issued in the same time period last year.

But there are several factors that can skew Connecticut’s permit numbers, according to Barry Rosa, new-homes and land director at Prudential Connecticut Real Estate. Not all cities and towns in the state report their permit data, and the sometimes extensive wait time for permits means the data does not always reflect what is happening in the market. Multifamily homes also are factored into Connecticut’s numbers.

“It’s not a good barometer of exactly where the future is,” Rosa said.

Even so, the 13 percent drop reflects what is happening in the rest of Connecticut’s housing market. Last year from January to July, 5,508 permits were issued in the 128 cities and towns that report their permits. This year, 4,825 were issued.

“I don’t see anything surprising,” Rosa said. “It’s kind of logical.”

New-home construction set a new record last year, according to the National Association of Home Builders.

Jim Lanzaro, a real estate agent at Prudential Connecticut’s Westport office who represents many builders in the area, said he also has noticed some changes in the market. But new homes are still popular, he noted, and in Westport – where vacant land is scarce – teardowns are the norm.

“We’re tearing down in almost every case,” Lanzaro said.

But increased caution on the parts of buyers has resulted in builders also proceeding more cautiously.

“We are very, very careful about where we buy the teardown property,” he said.

Several years ago, new homes were “flying off the shelves,” Lanzaro said, and developers could build new homes anywhere. But because many buyers are no longer willing to pay as much as they were when the market was at its hottest, and as the price of land continues to rise, builders are getting squeezed, and are being more careful.

“The market has changed,” Lanzaro said. “It’s a buyer’s market.”

That is true across the country, according to NAHB.

“Homebuying conditions actually are quite favorable at this time,” said NAHB Chief Economist David Seiders in a prepared statement. “There are a lot of homes on the market, mortgage rates are at historically low levels, house prices are softening and household income growth is proceeding in some areas. These developments are improving the affordability of homebuying.”

‘A Lot of Stuff’

But some trends are helping the housing market stay healthy. About half of the phone calls Lanzaro receives are from people who are relocating to Fairfield County, so they are under more pressure to buy a home.

“There are buyers out there,” Lanzaro said.

He added that he is confident about the future success of Westport’s market.

“I don’t see a drastic slowdown of new construction in Westport,” Lanzaro said.

Fairfield County has enjoyed a healthy new-home market this year, Rosa said. The county’s numbers tend to move up and down a lot, depending on which large projects get permitted. This year, projects in Norwalk and Stamford pushed up the numbers. Hartford and New London counties also saw good numbers.

“New London has had a lot of stuff going on,” Rosa said.

Across the country, builders slowed the monthly pace of single-family home construction by 5.9 percent in August to 1.36 million units, an almost 21 percent drop from August 2005 – although in the Northeast, housing starts rose over the numbers from a year earlier. Additionally, multifamily housing construction was down 6.7 percent for the month to a seasonally adjusted annual rate of 305,000 units, 15.7 percent lower than the August 2005 pace, according to NAHB.

But because housing starts were up so much last year, there is still something of a net increase over 2004 numbers, Rosa said.

“You’re going to see decreases,” he said. “It has to happen.”

NAHB experts echoed Rosa’s analysis.

“We are in the midst of an inevitable adjustment following the housing boom of 2004-2005 when housing market activity soared to unsustainable levels,” Seiders said in a prepared statement. “The downward adjustment to housing production should run its course by mid-2007. The market that emerges from this correction will display good balance between supply and demand and move to a healthy and sustainable trend based on solid underlying fundamentals.”

“Builders have been reporting a weakening in demand for some time and appropriately are cutting back on new supply in order to meet current market conditions and control their inventories,” said David Pressly, president of NAHB and a homebuilder from Statesville, N.C. “Many builders also are offering substantial incentives to bolster sales and limit cancellations, and with mortgage rates still very favorable, now is a good time to buy.”

While the Northeast was the only region to see an increase in housing starts over last August, construction of new homes and apartments was down 6.1 percent in the South, 5.5 percent in the West and 12.2 percent in the Midwest. Housing starts rose in the Northeast by 5.4 percent for the month, following a 12.5 percent decline the month before.

Issuance of total building permits decreased 2.3 percent in August to a seasonally adjusted annual rate of 1.72 million units, 21.9 percent below the pace of a year ago. Single-family permit issuance was down 3.5 percent on a national basis to a pace of 1.28 million units for the month. The pace of multifamily permit issuance was up 1.1 percent to 443,000 units, although that pace was 11.2 percent below August 2005, according to NAHB.