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4 Hartford Business Journal | April 19, 2021 | HartfordBusiness.com contracts that were already signed with a customer. "It's difficult to get people to sign escalation clauses for materials," LaCava said. He said he's also seen the price of interior doors increase by more than 50%, and appliances such as refrigerators have been delayed by months in some cases due to pandemic-related supply chain disruptions. While LaCava was far from satisfied with the pace of construction demand in Greater Hartford over the past decade or more, he nevertheless has decided to wait out some of the current volatility and uncertainty. The situation is frustrating, he said, since the housing demand presents an opportunity that his industry hasn't seen in a long time. "We never really recovered from the Great Recession in Connecticut for homebuilding," LaCava said. "It's just too bad we finally get a little increase here in the state and business starts moving and then you've got to deal with all these other things." Bank lenders have taken note of the materials challenges, fueled in part by homebuilding increases across other parts of the country. Andreas Kapetanopoulos, Connecticut president for New York-based NBT Bank, which began lending here several years ago and is working with a handful of subdivision developers in the region, said his bank is focused on financing well- established builders. "It's the ones who have the experience, the liquidity and deeper pockets, so if cost overruns or other circumstances come along they can address that," Kapetanopoulos said. Deal Watch By Matt Pilon mpilon@hartfordbusiness.com C onnecticut single-family home sales have spiked over the past year to levels not seen since 2005, but don't expect an equivalent surge in new construction, area builders say. While home construction increased notably in 2020, it wasn't nearly to the same scale as home sales activity. Experts say soaring prices for key materials like lumber and uncertainty about how long the recent demand wave might last have created hesitation in many builders. Some have resisted an admittedly strong urge to take the financial risk to build more speculative homes in order to provide badly needed inventory in a tight housing market. Home sales volume would be higher — possibly by 20% across the U.S., the National Association of Realtors' chief economist Lawrence Yun estimated in January — if there was a greater supply of homes on the market. "If you don't have something already approved that you're working on, then you've already missed the boat," said Johnny Carrier, vice president of Plainville-based Carrier Group, a division of the family-owned homebuilding company By Carrier Inc., which completes upwards of 60 homes a year. "Everything we do always has such a lead time to it." Carrier said he isn't entirely sure what to make of the sudden spike in housing demand, which has been driven in part by out-of-state and first- time buyers. He hasn't encountered a comparable situation, spurred by the unusual dynamics of a 100-year pandemic, in his lifetime, he said. "For as fast as this firestorm came up, it could all crash tomorrow," he said. "It doesn't take much to upset it." Material volatility Lumber prices have soared over the past year, which has added $24,000 to the cost of an average single-family home, the National Association of Home Builders said recently. As of March, the producer price index for softwood lumber was sitting at a record high, up 103% from March 2020, according to the U.S. Bureau of Labor Statistics. George LaCava, a principal at Cromwell-based Trilacon Development Corp., said he's felt the pain of those increases, which have forced him to raise the price of some homes he's built recently just to break even. However, he's had to eat the higher costs a few times for Building Barriers CT homebuilders are busier, but struggle to fully seize on hot housing market HBJ PHOTO | STEVE LASCHEVER Johnny Carrier, vice president of Plainville-based Carrier Group, a division of the family-owned homebuilding company By Carrier Inc., said he is being cautious about building new homes on spec despite significant demand for single-family dwellings in the state. Year No. of permits 2008 3,105 2009 2,049 2010 2,480 2011 2,059 2012 2,330 2013 2,804 2014 2,453 2015 2,452 2016 2,442 2017 2,626 2018 2,786 2019 2,589 2020 3,042 More new homes being built in CT 2020 was the busiest year for new single-family housing permits in Connecticut since 2008. Source: U.S. Census Bureau data compiled by Federal Reserve Bank of St. Louis