As one member of a two-man operation, plumber George Doughty didn’t have much cushion when the economy collapsed in 2008. So when demand dried up to install bathrooms in new homes and repair leaky faucets, he had to lay off his son.

Then he had to lay off himself.

“It almost killed me,” said Doughty, 62, who is based in Brunswick and didn’t take a salary until the business stabilized. “I just had to keep the place alive until things began to turn around a little.”

Doughty is just one of many plumbers, excavators, builders, lumber suppliers, surveyors and other members of the building trades who saw business practically disappear during the recession. While the market for new-home construction is slowly recovering, residential building activity is still just a fraction of what it was a decade ago.

In 37 towns and cities stretching from Lewiston to York, 1,245 building permits for single-family homes were pulled in 2013, roughly half the amount taken out in 2004, according to a Maine Sunday Telegram analysis based on data from Construction Data New England, a Windham-based consulting firm.

As the work went away, so did the jobs.

The number of people who work in residential construction in York, Sagadahoc, Cumberland and Androscoggin counties plunged by 36 percent in the past decade, according to the Maine Department of Labor. In 2004, 2,589 people were employed in residential building construction in those four southern Maine counties. Last year, just 1,653 people worked in those jobs.

While builders report that new-home building activity is rebounding, the sector won’t recover completely this year. In the first six months of 2014, just 561 permits were pulled in southern Maine, less than half the number pulled in the first half of 2004.

And builders and economists say that because of stagnant population growth, the chronic skilled-labor shortage and the amount of housing on the market that still needs to be absorbed, the sector may never return to where it was 10 years ago.

“We’ll never get back to the point where we were building 7,000 new houses statewide per year,” said Mark Patterson, co-owner of PATCO Construction Inc., a Sanford-based construction firm. He said he wouldn’t want to return to the construction levels that preceded the crash in the housing market, but the market would be considered strong if about 4,200 building permits were taken out in a year.

“We were building more product and more inventory than we could absorb,” he said of pre-recession activity. “But (now) we need to get to healthier levels.”

Patterson is encouraged by increasing consumer confidence and job-creation indicators, and the phone inquiries he’s getting about projects for next spring. But even if activity picks up, Patterson, like so many others in the building trades, says his business will never be the same. His staff of 22 workers is half the size it was a decade ago. To offset the drop in demand to build new homes, he’s branched into multifamily projects, such as townhouses and condos.

“I’m cautiously optimistic,” he said.

WHY NEW HOUSING MATTERS

Residential construction accounts for just 2 percent of employment in Maine – an estimated 11,250 jobs – and all construction comprises about 4.3 percent of the state’s gross domestic product, or GDP – the value of goods and services produced by the state, said State Economist Amanda Rector.

But new-home building has a much larger economic impact than the jobs and goods it directly creates. When someone applies for a permit to build a new home, it sparks a flurry of other activity that pumps cash into the economy and spurs job creation.

Once the permit has been pulled, a consumer has likely applied for a mortgage, which creates new business for a bank. The consumer has also paid the landowner and the developer to purchase the site, paid the local municipality permitting fees and hired an architect, surveyor, builders, contractors and plumbers. They, in turn, hire workers and buy raw materials to complete the job. Ultimately the buyer will need to furnish the home, which will pour money into the coffers of retailers who sell big-ticket items like appliances and furniture.

The consumer will also need to pay local utilities to keep the lights on, the heat turned up and the water running. And once the house is completed, the taxable value of the property will be considerably higher, which will bolster municipal tax revenues.

And the economic impact continues to trickle through the economy, as the people in the building trades take their wages and spend them things such as utilities and making capital investments. “So those dollars continue to circulate through Maine’s economy,” said Rector.

All of those factors lead financial forecasters to consider housing starts and building permits leading economic indicators.

What’s more, new-home construction also has a significant impact on business growth, said economist Jim Damicis, senior vice president with Camoin Associates, a Saratoga Springs, New York-based consulting firm with offices in Scarborough.

Companies that are considering coming to Maine or trying to grow here need housing that’s available and affordable for their workers, particularly in commercial hubs like Portland.

When compiling Portland’s Economic Scorecard this fall, Damicis identified the lack of workforce housing as a critical problem.

“It is constraining Portland’s economic growth and many of the major metropolitan areas,” he said. “As businesses look to expand or relocate, they want to know where their workers are going to come from. They’re going to look at housing availability and costs, even if they’re not in the business of housing workers. It’s inefficient to have people commuting.”

More shifts ahead

The crash in the new-housing market in Maine was a reflection of what was happening nationwide. In 2007, the number of permits pulled nationally for new single-family homes plummeted by 29 percent from the previous year, while it dropped by 22 percent in Maine, according to data from the U.S. Census. The decline continued for two years before starting to stabilize in 2010.

As unemployment and interest rates have dropped since then, and wages have started to rise, the new housing sector in Maine has been slow to recover, Rector said.

Part of that is because of market dynamics: Overbuilding of single-family homes during the housing boom means there are still plenty of existing homes on the market, plus foreclosures.

But the biggest factor has been Maine’s demographics.

“Maine’s population growth has been negligible in recent years,” Rector said. “There aren’t a lot of new families moving into the state and building houses, and Maine’s current population is aging. Generally speaking, they are more likely to be selling their single-family houses and moving to apartments or condos than building new homes.”

Online producer Christian MilNeil contributed to this report.

Jennifer Van Allen can be contacted at:

[email protected]