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The soon-to-be-released 1997
Department of Economic and
Community Development (DECD)
annual Housing Production and
Permit report, will present some
strong summary statistics about
the Connecticut housing sector. A
preview is presented in this story.
Total Housing Production
The housing sector is booming.
The most recently revised annual
statistics released from the Bureau
of the Census indicate
that the total number of permits is
up 19.7 percent, from 7,808 in 1996 to
9,349 through 1997, making it the biggest
increase since 1987.
Counties
In 1997, Hartford
County authorized the largest number of
new residential permits with 2,246, followed by
Fairfield County with 2,045, and
New Haven County with 2,030.
These three counties combined
accounted for 67.6 percent of total
permits issued. Compared with
the State growth rate of 19.7
percent, New Haven County fared
much better with growth of 37.3
percent, followed by Middlesex
County with 24.3 percent and
Hartford County with 24.2 percent.
Municipalities
The top five communities
combined accounted for over 12
percent of the total permits authorized.
Manchester led all Connecticut
Connecticut communities with 321
permits issued, followed by
Danbury with 242 units, Stamford
with 199 units, Milford with 197
units, and Newtown with 195 units.
At the end of 1997, DECD sent
out a survey to collect the residential
demolition permits issued.
Over 85 percent of the cities and
towns responded to our request.
Bridgeport issued the most demolition
permits with199 units,
Meriden with 103, Waterbury with
83, Hartford with 79 and New
Britain with 62. The five cities
contributed over 44 percent of all
demolition permits.
Construction Employment
Construction employment was
strong in 1997. It has shown a
steady increase since 1991, with
an annual average growth rate of
1.6 percent. The State Department
of Labor's 1997 benchmarked
annual average data indicated an
increase of 32,700 nonfarm jobs
from the revised figure in 1996.
The construction industry employed
an added 4,300 workers
during the same period, a significant
13 percent share of the
increase, second to the service
industry with a 47 percent share
(gained 15,400 jobs), and tied with
the retail trade sector.
Median Home Sales Price
According to Connecticut Market
Data 1998, the State median home
sales price dropped eight percent
from $150,000 in 1988 to
$138,000 in 1996. Only a dozen
towns actually showed an increase
in median home sales prices.
Norfolk had the highest growth
rate with16.4 percent; Greenwich
followed with 13.9 percent; and
Ridgefield with 11.0 percent. On
the down side, the cities of Bridgeport,
New Britain, and New Haven
had the biggest decline rate in
median home prices during the
same period, with 42.8 percent,
40.0 percent, and 36.4 percent
respectively.
Construction Value
The 1997 average construction
value of single unit housing has
risen 2.5 percent from $127,172 to
$130,363 compared with previous
year. The Consumer Price Index
for NY-Northern NJ-Long Island
used to approximate price trends
in Connecticut rose 2.0 percent in
1997. Thus, the growth rate of
average construction value slightly
outpaced the rate of inflation.
Impact on Economy
Except for a brief period in
1993 when it was below the
current rate of seven percent, the
30-year conventional mortgage
rate is now at its lowest level in 24
years. Recently, the stock market
broke over the 9,100-point mark,
which implies that wealth has
proportionally increased. Together
with the decline of median home
sales prices, real estate market
transactions have gone up 13.9
percent compared with 1996,
according to the Commercial
Record Real Estate Trendlines
Report released in April.
Conclusion
Since the end of the early 90's
recession, the housing market has
rebounded noticeably. Although
interest rates play a major role in
the housing market, other factors
have contributed to the strong
housing sector. In summary,
falling median home sale prices, a
rising stock market, and positive
employment trends have made
1997 for housing a year "as good
as it gets."
The table on page four profiles
all of Connecticut's 169
cities and towns by five major
economic indicators. Town data in
this report on the labor force,
unemployment rate, and jobs is for
1997, while the latest town data
on population and per capita
personal income is for 1996. Here
is a quick summary of the cities
and towns that ended up at the
top and bottom of these measures.
Population
According to the most recent
State Department of Public Health
estimates, Eastford experienced
the fastest population growth out
of all 169 towns and cities
throughout the State, rising 8.05
percent, or 110 people, from 1995
to 1996. The biggest drop occurred
in Manchester (-3.5%, or
1,780 people), while the State's
population shrank only slightly by
0.01 percent in 1996.
Labor Force
The newly revised 1997 data
from the State Labor Department
showed that Bethlehem led in
labor force growth with a 2.6
percent increase (49 people) over
the year, while Scotland came in
last with a 3.7 percent (91 person)
decline. Meanwhile, the statewide
labor force rose 0.1 percent, or
2,084, from 1996.
Unemployment Rate
Hartford's 10.0 percent was the
highest unemployment rate in
1997, almost twice as high as the
State's average of 5.1 percent. The
towns with the lowest unemployment
rate of 1.7 percent were New
Canaan and Weston.
Nonfarm Employment
Connecticut's nonfarm employment
increased 2.0 percent
(31,282 jobs) between June 1996
and June 1997. Willington's
employment grew 38 percent, an
addition of 60 jobs, while 31
percent of the jobs in Union, one of
the least populated towns, were
lost over the year. From the major
cities, Hartford added 6,470 jobs,
while New Haven lost 1,410 during
the same period.
Per Capita Personal Income
In 1996, the per capita personal
income estimates prepared
by DataCore Partnership, Inc. and
released by the Connecticut
Department of Economic and
Community Development showed
growth rates ranging from an
increase of 66.9 percent in
Plainville to the decline of 0.3
percent in Morris. New Canaan
had the highest per capita personal
income of $91,777, while the
lowest was in Hartford at $17,274.
The State's average was $33,875.
Commissioner James F.
Abromaitis of the Connecticut
Department of Economic and
Community Development today
announced that Connecticut
communities authorized 747 new
housing units in March 1998, an
18 percent decrease compared to
March of 1997 when 911 were
authorized.
The Department further
indicated that the 747 units
permitted in March 1998 represent
an increase of 15.5 percent
from the 647 units permitted in
February 1998. The year-to-date
permits are up 14.7 percent, from
1,858 through March 1997, to
2,131 through March 1998.
"Permit activity in 1998 indicates
that growth in the housing
sector continues," James F.
Abromaitis said. "As a symptom of
the overall strength of
Connecticut's economy, the first
quarter increase of 14.7 percent is
an encouraging sign."
Reports from municipal officials
throughout the state indicate that
Litchfield County with 29.2 percent
showed the greatest percentage
increase in March
compared to the same month a
year ago. New London County
followed with a 13.3 percent increase.
Hartford County documented
the largest number of new,
authorized units in March with
190. Fairfield County followed
with 168 units and New Haven
County had 137 units.
Southington led all Connecticut
communities with 32 units,
followed by Shelton with 26, and
Stamford with 22.
For the second month in a
row, the Connecticut
coincident and leading employment
indexes both reached new
peaks in the current expansion
with the release of (preliminary)
February data. The coincident
index portrays the
Connecticut economy as shifting
into a higher gear in early 1996, a
gear in which the economy has
remained to date. This recent
growth is in marked contrast with
the anemic recovery in a lower
gear that characterized the Connecticut
economy from 1992
through 1995. Moreover, the
leading index shows no sign of
reversing its upward momentum.
So for the foreseeable future, the
Connecticut economic highway
appears to be clear of potholes and
other obstructions.
The coincident index, a barometer
of current employment activity,
has recorded positive movements
in every month since
January 1997. The labor market
has tightened significantly by
historical standards with an
unemployment rate of 3.8 percent
in both January and February. It
is also true, however, that the
unemployment rate was even lower
in the over-heated economy in the
late 1980s. For example, the
unemployment rate averaged just
under 3 percent for all of 1988. So
while the labor market is tight, it is
not as tight as it was in 1988.
Nonetheless, we need to watch
labor market conditions carefully
for any potential signs of weakness.
The leading index, a barometer
of future employment activity, rose
in January once again to a new
peak. The seasonally-adjusted
housing permit numbers have
dominated the story so far in 1998,
having increased by just over 160
and 35 percent on a year-overyear
basis in January and February,
respectively. Although the
February number is down from the
January number by over 80
percent, it is higher than any other
month since February 1993. The
mild weather conditions probably
contributed to these numbers.
Careful attention needs to given to
the housing permit numbers over
the next several months to determine
if these numbers represent
fundamental shift in activity, or
just weather-related changes. At
the moment, it appears that the
movement is too large to reflect
only weather-related factors.
In summary, the coincident
employment index rose from 86.8
in February 1997 to 94.6 in
February 1998. All four index
components continue to point in a
positive direction on a year-overyear
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 89.9 in February 1997 to
92.1 in February 1998. All five
index components sent positive
signals on a year-over-year basis
with a lower short-duration (less
than 15 weeks) unemployment
rate, lower initial claims for unemployment
insurance, higher total
housing permits, a higher average
workweek of manufacturing
production workers, and higher
Hartford help-wanted advertising.
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) 486-0485, Storrs
Campus] provided research support.
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