Housing Prices, Job Growth Slow In Connecticut, Report Says

NEW HAVEN — (AP) After years of rapid growth, housing prices increased more slowly in Connecticut this year while the state’s job growth remained sluggish, according to a recent federal agency report.

The last quarterly report by the Federal Deposit Insurance Corp showed house prices rose 5.4 percent in Connecticut during the first half of the year. That was about half the appreciation rate of 11.6 percent in the second half of last year and down from 15 percent in 2004.

“We’re looking at the housing market having a soft landing,” said Paul Driscoll, a regional manager with FDIC. “We’re not seeing any huge correction on the negative side. We’re just seeing a continuing slowing in the rate of appreciation.”

Incomes have not kept pace with the rapid rise in house prices, Driscoll said. The slower growth in house prices occurred across the state.

“The affordability issue was going to catch up with the market,” Driscoll said. “That’s pretty much what is happening now.”

As the market cools, construction of new homes also is slowing. The number of permits issued during the second quarter of this year fell 16 percent compared with the same period a year ago, according to the report.

Construction employment fell below 64,000 in the second quarter, compared with nearly 66,000 jobs from 2004 until earlier this year.

“Those jobs could evaporate if there is less building,” Driscoll said.

Connecticut ranked 45th in job growth, though the state’s unemployment rate of fou percent was better than the national average. Many New England states have experienced slow job and population growth, Driscoll said.

Unlike much of the country, Connecticut and Massachusetts still have not fully recovered the jobs lost from the recession five years ago, Driscoll said. The higher cost of living makes it tougher to attract new residents, he said.

“It’s a concern,” Driscoll said. “It’s something we’re watching.”

New Haven Mayor John DeStefano, a Democrat running for governor against Republican Governor M. Jodi Rell, seized on the report to criticize Rell’s campaign ads that tout Connecticut as a leader in New England in creating jobs.

Connecticut is ranked near the bottom of New England states for job growth, behind Massachusetts, New Hampshire and Vermont, DeStefano said.

The Rell campaign defended the governor’s message, pointing to the rate of job growth since she took over in July 2004.

“Connecticut has added nearly 20,000 jobs in the two years Gov Rell has been in office and our unemployment rate is far below the national average, while our per capita income has increased for three years running and is No. 1 in the nation,” Rell campaign spokesman Rich Harris said.