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The Department of Economic
and Community Development (DECD), the lead agency in
matters related to housing,
economic development and
community development in
Connecticut, monitors housing
growth, analyzes trends, and
collects data concerning the
public and private sectors of the
housing market. DECD annually
publishes statistics on housing
production in the State and
distributes a monthly update to
all interested parties.
Beginning in 1996, the Bureau
of the Census changed the
reporting forms. Towns no longer
report on permits for demolitions,
additions, and alterations or
distinguish between privatelyowned
and publicly-owned units.
As a consequence, this information
will not be included in the
analysis. In some cases, however,
towns did report demolitions
and the information is included.
Total Housing Production
In 1996, a total of 7,817
housing units were authorized to
be added to the housing unit
inventory in Connecticut. Compared
with 1995 production, 557
fewer units were authorized in
1996, which represents a 6.7%
decrease from the previous year.
The first five months of 1996
showed consistent increases in
permits issued, peaking in May,
when 902 new units were authorized.
The permit activity stabilized
from June to October and
showed decreases for the remainder
of the year.
Counties
A comparison of counties
showed that Hartford county
towns issued 1,809 permits for
new residential construction, the
highest number for any county in
1996. Fairfield and New Haven
counties followed with 1,747 and
1,479 permits issued respectively. Litchfield, New London
and Tolland counties showed an
increase in permit activity in
1996 compared to 1995.
Municipalities
Stamford led the state in net
gain during 1996 with an increase
of 286 housing units. This figure is down 50 percent
from the town's 1995 total of 575
units. Newtown ranked second
in 1996, issuing permits for a net
gain of 199 units. This was a
decrease of 4.8 percent from the
municipality's 1995 number of
209. Southington finished third
in 1996, issuing permits for a net
gain of 179 units. This figure
represented a 64.2 percent
increase from last year. There
are four Connecticut municipalities
that recorded a net loss in
housing units. The largest
decline occurred in Bridgeport
with a net loss of 129 units,
followed by Mansfield (-15 units),
Hartford (-9 units), and New
Britain (-8 units).
Net Gain
Connecticut's inventory of
residential units was estimated to
be 1,366,410 at the end of 1996.
This estimate was based on a net
gain of 45,560 housing units
authorized from January of 1991
through December of 1996,
added to the base of 1,320,850
housing units reported in the
1990 census.
Construction Value
The estimated value of total
residential activity in 1996 was
$901 million, down 32 percent
from the 1995 level of $1.32
billion. The estimated value of
authorized one-family detached
construction in 1996 was $826
million, or an average of
$127,171 per house. The total
value was down 2.7 percent from
the $849 million value in 1995.
The average showed an increase
during 1996, up 0.14 percent
from the $126,991 per house in 1995.
Average Annual Growth Rate
Average annual growth rates
(AAGR), which show the percentage
change from year to year, are
calculated for the U.S., its regions,
and the State of Connecticut
in the table below. From
1980 to 1996, only the Midwest
had a positive growth of 0.65
percent. The U.S. experienced a
less than one percent decline of
0.38 percent. The Northeast
region experienced a 0.97 percent
decline. However, Connecticut
housing permits fell 2.11 percent
on an average annual basis.
Connecticut vs. U.S. Housing Production
While Connecticut's 1996
total housing permits decreased
6.7 percent from 8,374 to 7,817
units, U. S. total housing permits
increased 7.6 percent from 1.31
to 1.41 million units in 1996.
Connecticut and U. S. historical
housing permit patterns can be
compared using an index based
on 1980 (1980 = 1.00) shown in
the figure on the front page.
Connecticut annual permits
peaked in 1986 at 30,163 units
when the index stood at 2.74.
This coincided with the U.S. peak
since 1980 when U.S. annual
permits stood at 1.76 million
units in 1986. The 1980s were a
period of rapid housing stock
expansion for Connecticut. As
the index clearly shows, the
Connecticut housing permit
index far outpaced the U.S.
permit index after the mid-80s.
Since then, the index has leveled off.
Current housing permit
activity as measured by the 1980
= 1.00 index, contrary to popular
perception, does not diverge
much from U.S. housing permit
activity. Although the Connecticut
1996 index level is still below
the national index level, there is a
much closer alignment of the
Connecticut and U.S. indices
after 1990 than is commonly
believed. The dramatic decline
since the 1989-92 "great recession"
has not been reversed.
Conclusion
In summary, the DECD's
latest annual report published in
May 1997 finalized the annual
data for 1996. This report
showed total housing production
of 7,817 units. This was a revision
of the 7,714 annual total
reported in the February Economic
Digest for 1996. Furthermore,
the DECD began to report
on a monthly basis the same data
that is verified and released by
the Census Bureau beginning
with the March data in the May
issue of the Digest. The full 1996
Annual Housing Production and
Permit Authorized Construction
report is available upon request
by calling (860)566-1887.
A fter dropping almost 10
percent from its peak employment level during the recession
years, the New Haven Labor
Market Area's economy has been
improving since 1992, having
added 7,400 jobs by the end of
1996. During the past four years
of economic recovery, the area's
employment gains have made up
13 percent of the State's total
new jobs. During the eighties,
the New Haven LMA outperformed
the State in terms of job
growth, but was struck more
severely during the last recession,
trailing the State as a whole
during five of the six years between 1990 and 1995.
The major industry
groups that contributed to the New Haven LMA's
employment increase since 1992 were services,
retail trade and construction.
The services industry created 10,400
jobs between 1992 and 1996, a growth of 14.0
percent, while jobs statewide grew by 13.8
percent. Most of the employment gain in the area
occurred in the business services
(such as software and internet
services) and health services
(skilled nursing and home health
care) sectors.
The second largest job increase
came in retail trade, with
1,700 new positions. This was
almost in line with the State's 4.8
percent growth. The opening of
the Factory Outlets in Clinton
played a major role in retail's
rapid job growth. The construction
industry added 900 more
jobs over the four year period,
expanding almost twice as fast as
in the State as a whole.
On the flip side, the region
lost 3,300 manufacturing jobs
between 1992 and 1996. The largest
loss came from manufacturers
of transportation equipment
(such as United Technologies
Corporation), trimming 800
of their local workforce. Still,
manufacturing employment in
the New Haven LMA was not as
greatly affected as it was in the
State overall. Some sectors, such
as electronic component manufacturers
have actually increased
the number of their employees by
20.5 percent. Plus, there is other
good news related to manufacturing
in the area. For example,
Allied Signal (electronics navigation
equipment) is expected to
relocate to Cheshire from
Norwood, Massachusetts, creating
300 engineering, administrative,
and manufacturing jobs
some time this year. FireLite
Alarms/Notifier of North
Branford will be expanding,
which will create opportunities
for 100 to 200 more workers.
When it comes to earnings,
however, real manufacturing
wages in the area have been
declining since 1993, and workers
have been paid at a lower rate
than statewide.
Another major industry group
that faced a shrinking payroll
was Finance, Insurance, and Real
Estate (FIRE). From 1992 to
1996 FIRE employers laid off
1,500 workers, affecting the New
Haven area more harshly than in
the State as a whole. Employment
in the Transportation and
Public Utilities sector, which
includes Southern New England
Telephone in the region, has been
flat, while the State experienced
7.5 percent job growth. Government
sector employment decreased
by 2.8 percent during the
same period in the New Haven
LMA, but the State's rose 7.8
percent. (However, Indian tribal
government employment is
included in the State figure.
Without it, statewide government
employment would have risen
nominally at best.)
Although the New Haven
Labor Market Area's
employment growth has
been slower than the
State's in recent years,
the prospect for the
region is promising. By
September this year,
Omni Hotel is expected
to operate the former
Park Plaza in New Haven
after it undergoes a $23
million renovation which
will add 250 jobs. Moreover,
Williams Specialty
Steel Inc., a new stainless
steel plant, is to be built in
New Haven, which will lift the
manufacturing industry. Over
the next two years, 3,000 construction
jobs will be created to
build the 250,000 square foot
plant that will eventually add 350
permanent blue-collar jobs that
pay $40,000 or more annually.
This will also stimulate nearly
1,000 additional "multiplier" jobs
in the region to serve the plant
and its employees. Plus, if the
Marketplace at Long Wharf Mall
opens up in New Haven by year
2000, it would create thousands
of new construction, retail, and
services jobs in the process. All
this will help the economy of the
New Haven Labor Market Area to
prosper into the next millennium.
The Connecticut Department
of Economic and Community
Development announced that
Connecticut communities authorized
1,036 new housing units in
April 1997, a 57% increase
compared to April 1996 when
660 were authorized.
The Department further
indicated that the 1,036 units
permitted in April 1997 represent
an increase of 14% from the
909 units permitted in March
1997, and that the year-to-date
permits are up 49%, from 1,942
through April 1996, to 2,894
through April 1997.
Reports from municipal
officials throughout the state
indicate that Hartford County
showed the greatest percentage
increase in April compared to the
same month a year ago: 150.6%,
followed by Litchfield County with
a 67.5% increase.
Hartford County documented
the largest number of new,
authorized units in April with
386. Fairfield County followed
with 208 units and New Haven
County had 163 units.
Manchester led all Connecticut
communities with 194 units, followed by Farmington
with 44, and Stamford with 34.
Both the Connecticut coincident
and leading employment indexes, barometers of
current and future employment
activity, climbed to their respective
peaks in the current expansion
with the release of (preliminary)
March data. The first
quarter movements in the coincident
index experienced a more rapid growth rate
than has been the norm during
the current expansion, increasing
by 3.6 percent in these three
months (or just over 15 percent
on an annual basis). This acceleration
in the movement of the
coincident index, which we
mentioned in last month's report,
mirrors a similar pattern in this
index last year at about this time.
Connecticut's leading employment
index rose in both January
and March, but remained unchanged
in February. As such,
the leading index continues to
bounce around, as we have
reported in this space in previous
months. The leading index has
still not moved in the same
direction, either up or down, for
more than two consecutive
months since December 1994. It
currently, however, has climbed
to its peak in the current expansion.
The coincident and leading
employment indexes continue to
send signals consistent with a
continuation of the current
expansion. Except for the continuing
lack of a clear upward
movement in the leading index,
no signs have appeared on the
horizon indicating that the
expansion may be in its final
phase. Of course, Connecticut's
economic vitality relies critically
on the continued recovery of the
national economy. Concerns
about the Federal Reserve's
recent attempts to head off
inflationary pressures by applying
the monetary brakes raise
serious questions about the
future of the national recovery.
Connecticut's expansion will not
likely continue for long after the
national expansion heads south.
But, as we noted in last month's
story, our next recession may be
much less severe than the last
because of the restructuring and
downsizing that Connecticut
experienced during the late
1980s and early 1990s.
In summary, the coincident
employment index rose from 83.2
in March 1996 to 89.2 in March
1997. All four index components
continue to point in a positive
direction on a year-over-year
basis with higher nonfarm employment,
higher total employment,
a lower insured unemployment
rate, and a lower total
unemployment rate.
The leading employment index
rose from 89.0 in March 1996 to
89.9 in March 1997. Three index
components sent positive signals
on a year-over-year basis with a
lower short-duration (less than
15 weeks) unemployment rate,
higher total housing permits, and
lower initial claims for unemployment
insurance. Hartford helpwanted
advertising remained
unchanged on a year-over-year
basis while the lone negative
signal came from a shorter
average work week of manufacturing
production workers.
Source: Connecticut Center for Economic Analysis, University of Connecticut. Developed by Pami Dua [(203) 461-6644,
Stamford Campus (on leave)] and Stephen M. Miller [(860) 486-3853, Storrs Campus]. Kathryn E. Parr [(860) 486-3022, Storrs
Campus] provided research support.
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