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New home construction in R.I. continues to slow

01:00 AM EST on Wednesday, February 20, 2008

By Lynn Arditi

Journal Staff Writer

Rhode Island’s new home construction slowed last year, with the number of single-family building permits falling 9 percent for the second straight year, according to a report from the Rhode Island Builders Association.

There were 1,458 single-family building permits issued in the state last year, compared with 1,606 permits in 2006. The permits are a rough proxy for new home construction.

Rhode Island’s slowdown in single-family building is far less severe than in the rest of New England, where single-family building permits last year declined an average of 23 percent, according to the National Association of Home Builders.

Nationally, single-family permits last year declined 29 percent from 2006, the national association reported.

“Rhode Island’s housing market continues to be one of the healthiest in the country,” the builders association’s president, Thomas E. McNulty, said in a statement. “We believe that the availability of housing choices in the marketplace together with historically low mortgage rates makes this a very good time to buy a home in Rhode Island.”

Unlike the rest of the country, Rhode Island’s new home construction has been falling every year since 2000. Even during the national housing boom, single-family building permits in the state declined. In all, permits during the last 7 years in the state have fallen 35.4 percent, according to the Rhode Island Builders Association.

Roger Warren, executive director of the builders association, said in an interview that he attributes the decline to anti-growth policies aimed at keeping down school budgets.

“Every time I think about what is it that could cause a decline” during the housing boom, said Warren, the explanation seems to be “the combined actions of the municipalities and their attempts to slow growth in their towns and resist permitting.”

The steepest one-year drop recorded in Rhode Island was in 1995, when single-family building permits fell 11 percent. During the next four years of the post-recession recovery, home construction activity in the state picked up, with building permits from 1995 through 1999 climbing nearly 28 percent.

Last year, of the 39 cities and towns in Rhode Island, building permits declined in 24 communities, increased in 14, and remained unchanged in one, according to the report.

Among the communities with the biggest declines were Jamestown, Lincoln, North Providence, Pawtucket and Warren. Nine communities showed “significant increases” in building activity, including Coventry, Exeter, Johnston, New Shoreham and North Kingstown.

“While the housing market has slowed in Rhode Island, what we are seeing is a continuation of activity without an increase in the rate of decline,” Warren said in a statement. “We’re hopeful that 2008 will show a leveling off and a recovery soon after.”

The rate of decline in building activity, Warren said, is not so bad considering the housing market as a whole. For example, during the last two years, single-family permits declined 17 percent, while existing home sales fell nearly 22 percent. The builders association has nearly 1,500 professional member companies in Rhode Island.

larditi@projo.com

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