Hurt by a slowing economy and a lack of land, new-home starts in South County were flat from January through October, the Rhode Island
Builders Association said yesterday.
In some of the county's once-hot coastal towns, the number of single-family building permits actually fell, although not by much. In
Westerly, the number of permits fell to 91 from 105, a seven-year low. In Narragansett, the number fell to 90 from 95, a four-year low.
Builders and town officials say the demand for new -- or bigger -- homes hasn't cooled.
Instead, developers are running out of house lots, said Westerly Building Official Bart Fraser.
At the same time, many owners are remodeling old homes by adding floors or rooms, said Fraser. "A lot of people are knocking down homes
and rebuilding."
Demand for houses at two new Picerne Homes subdivisions remains strong, said Ronald Smith, vice president of the company's single-family
homes division.
The company is building houses priced from $280,000 to $330,000 at South Woods, a 50-home subdivision on Route 138 and Rose Hill Road.
"Demand has not wavered. It's supply. There are less permits going out and the problem is finding new land," Smith said.
Some towns are scooping up the best land for open space. Towns are also driving up home prices by limiting the number of new-home permits,
charging building fees and requiring bigger house lots, he said.
Despite the flat numbers, South Kingstown, North Kingstown, Westerly, Narragansett and Charlestown were among those communities that
issued the most permits.
In South Kingstown, officials approved 106 single-family building permits during the first 10 months, the same number as Cranston. Only
Cumberland officials, who handed out 139 permits, approved more.
Westerly, with 91 permits, was fourth on the trade group's list, followed by Narragansett, with 90 permits. North Kingstown, with 88
permits, ranked sixth; and Charlestown, with 60 permits, ranked ninth.
The South County figures reflect a statewide trend.
Last month, the builders association said the number of permits for single-family homes rose just slightly in the first nine months of
this year, compared with last year.
Roger Warren, executive director of the association, predicted a flat year for new-home activity.
But in Westerly, a lot is happening beyond new home construction, said Fraser. Both Westerly Hospital and Wal-Mart plan to expand, he
said. "There's no lull in construction here."
And next year, Picerne plans to sell new homes priced from $220,000 to $275,00 in Hopkinton. Picerne will target buyers who can't afford
to live in beachfront communities such as Narragansett and South Kingstown, Smith said.
TOP 10 COMMUNITIES BASED ON BUILDING PERMITS
Number of permits issued for single-family homes, January through October 2002.
1. Cumberland -- 139
2. South Kingstown -- 106
Cranston -- 106
3. Coventry -- 93
4. Westerly -- 91
5. Narragansett -- 90
6. North Kingstown -- 88
Warwick -- 88
7. Portsmouth -- 84
8. Bristol -- 61
9. Charlestown -- 60
10. Smithfield -- 59
Source: R.I. Builders Association
Rhode Island Home Prices Continue to Climb Higher in First Quarter.
- Home prices in Rhode Island kept up their double-digit climb during the first quarter of this year, increasing at twice
the rate of prices nationwide.
The median price of a single-family home in the state surged nearly 12 percent from a year ago, to $235,000, according to a report by
the Rhode Association of Realtors. Nationally, single-family home prices rose 6 percent, to $170,800, according to a report by the
National Association of Realtors.
The number of single-family homes sold in Rhode Island during the first quarter of this year rose 6.8 percent, to 1,789, the state
organization's report said.
"We're still going strong," David Godden, president of the Rhode Island Association of Realtors, said in a statement. "We're not
seeing the unusual jumps in value that we did during the last two years, but we definitely remain on a good path."
Reports that the national economy is improving have fanned speculation that the Federal Reserve will raise interest rates this year,
possibly in August -- and that could nudge up mortgage rates.
Last week, the government reported that gross domestic product, which measures the value of goods and services sold, rose 4.2 percent
in the first quarter, up from 4.1 percent in the fourth quarter of last year. And there are signs that layoffs are easing. The Labor
Department reported that new filings for unemployment insurance nationally fell last week by 18,000, to 338,000.
The homebuying market, normally most active during the spring, has been bolstered in recent years by historically low mortgage rates.
Recently, however, those rates have been rising. For example, 30-year fixed-rate loans last week hit 6.01 percent, up from 5.38 percent
in mid-March, according to Freddie Mac, the huge mortgage lender.
The question is how much of an increase is enough to dampen home sales?
"The rise in interest rates isn't having that much impact on housing," said Walter Malony, a spokesman for the National Association of
Realtors. He said the association's market forecasts predict that rates will rise in August, and hit about 6.5 percent later this
year.
"Nonetheless," Malony said, "we'll be pretty close to a record (home sales number) this year."
The improving job market and rising gross domestic product are creating "a really favorable backdrop" for the housing market, he said.
Malony quoted the association's chief economist, David Lereah, as saying that he expects "a really big number of sales in the next two
months, and then a somewhat slower pace going forward."
Home prices during the first quarter rose in all but four Rhode Island communities -- Pawtucket, Westerly, Tiverton and Providence's
East Side. (The number of homes sold in those communities is so small, however, that even a few sales can skew the results.) The median
price of single-family homes on the East Side ticked down 4.35 percent, to $419,000.
The median price of a single-family home in Rhode Island at this time last year was $210,000, or $25,000 less than today.