Building permits for new homes in metropolitan Baltimore rose 10 percent during the third quarter, but economists and industry leaders were quick to downplay the figures as looking good only when compared to the depression in construction brought on by Iraq's invasion of Kuwait in August 1990.
"It's not good," said Mark Goldstein, an economist with the Baltimore Regional Council of Governments, which released the figures. "It shows that the residential market is still slow, that we haven't turned the corner yet."
Mr. Goldstein said that the disappointing performance of the building industry paints a dark near-term picture for the overall economy as well because housing construction is usually the first major economic indicator to respond to falling interest rates.
When the industry does perk up, it creates work for firms in both the manufacturing and services industries, he said.
"It's saying that future economic activity in the Baltimore market will not see a substantial recovery any time soon," Mr. Goldstein said.
Despite being higher than last year, the number of residential permits issued during the quarter was 36 percent below the average for the same months in the years 1982 through 1989. But the number of building permits is still higher than it was during the recession year of 1981, Mr. Goldstein said.
A vice president of the Home Builders' Association of Maryland said that the industry, which roared out of the 1981-1982 slowdown, is expecting a tepid recovery this time.
"I don't think anyone is optimistic about the near future, for two reasons," said Gary B. Blucher, who also runs Britannia Development Corp. in Owings Mills. "One is a lack of consumer confidence; the general public for the most part is holding back" from buying houses because consumers fear being laid off, he said.
Second, Mr. Blucher said, the industry is still hampered by a severe credit crunch. Banks won't finance home construction until a builder has a signed contract from a buyer. The banks also won't finance development of lots -- preparing raw land by getting county development approvals and building sewers and roads and then selling the "finished lots" to homebuilding companies.