Data: After fast start to 2022, new CT housing permits slowing down

Photo of Luther Turmelle
Construction on the new Windward Commons mixed income housing development on the site of the old Marina Village Public Housing complex in Bridgeport, Conn. on Wednesday, September 30, 2020.

Construction on the new Windward Commons mixed income housing development on the site of the old Marina Village Public Housing complex in Bridgeport, Conn. on Wednesday, September 30, 2020.

Brian A. Pounds / Hearst Connecticut Media

After a fast start to the year, Connecticut’s housing permit activity slowed to end the first quarter, data released this week shows.

The state Department of Economic and Community Development’s data shows housing permits dropped by 24.5 percent in March compared to the same month last year. In March, 351 new housing units were issued permits compared to 465 during the same period last year.

The number of housing units approved last month came after January permits hit a seven-year high. There were 454 units approved in January, the most for the month since 2014.

The surge in permit activity in January helped set the pace for an increase in the number of units approved during the first quarter of this year, according to data released this week. During the first quarter, 1,152 new units were issued permits, up from 910 in the first three months of 2021.

Milford issued the most permits in the state with 21 in March and 46 during the first quarter. In Simsbury, 20 units were approved in March and 24 during the first quarter.

Danbury had the third-most housing permit activity with 19 new units approved last month and 28 during the first three months of 2022.

The majority of the March new housing permits — 244 of the 351 — were for single-family homes. Permits approved for projects with five or more units accounted for the next largest amount with 95.

But housing permit activity on an annual basis has been declining since 2019, when 5,097 units were approved. There were 4,775 units approved the following year and 3,677 in 2021.

Uncertainty caused by supply chain problems and inflation could also hamper new housing development going forward.

Liz Verna, a principal in Wallingford-based Verna Builders, said the company is completing work on a 94-unit subdivision in Southington’s HillCrest Village. As she plans for the company’s future projects, Verna said the company may consider temporarily pausing large subdivision work.

“We also do property management of industrial and retail office space,” Verna said. “And we will also do some custom home building where costs are more controllable. But with the uncertainty of the supply chain and where the costs are going, I just can’t make the numbers work.”

The demand for new homes is still out there, she said, with a continued influx of home buyers from New York and other states.

“As soon as we list something, it goes,” Verna said.

But when doing a feasibility study on whether to move ahead on a subdivision project in excess of 50 homes, Verna said infrastructure costs and other uncertainties convinced her not to start the development.

“Even though the land was well-priced, I had subcontractors tell me they don’t know where their prices are going to be in six months, when I would have needed to start the work,” she said. “And it’s unfortunate that we’re not going to be able to do this because it’s the kind of housing Connecticut really needs, homes on small, quarter-acre lots that teachers and firefighters can afford.”

Donald Klepper-Smith, an economist with DataCore Partners, said the increase in housing permits bodes well for the state’s economy in the short term.

“As housing activity increases, so does consumption of consumer durables,” Klepper-Smith said, using the formal economic term for what many people refer to as big-ticket items like furniture, appliances and televisions.

Klepper-Smith said the Consumer Confidence Index future expectations numbers for New England have dropped by nearly 20 points since the start of the year, including a 16.6-point decline from March to April.

“The future expectations component is a leading indicator and it took a big hit because of what’s going on in Ukraine, as well as oil prices and inflation,” he said. “When people are purchasing these things — these new refrigerators, these new beds, these new televisions — they like to have some kind of certainty they are going to be able to pay for them going forward. And the way they are thinking about the next 6 to 12 months comes with a lot of uncertainty.”