Development in Howard County is experiencing a mild rebound after hitting a historic low last year, suggesting the worst of the recession might be over, according to an annual government report that tracks building activity in the county.

Only 1,163 new residences were completed in the year ending Sept. 30, 2009, the lowest number since 1982, according to the recently completed Development Monitoring Report. But the number of issued building permits increased, and continued to climb in the final quarter of 2009, after the reporting period ended, planners said.

The annual report, which began in 1992 when the county adopted growth controls, covers each 12-month period between Oct. 1 and Sept. 30.

In a cover letter, county planning director Marsha S. McLaughlin noted that the most recent reporting period started in October 2008, "the month the national credit crisis accelerated. It appears, however, that the economy has bottomed out as building starts actually increased last year compared to the previous year." There were 1,237 permits issued during this current reporting period compared to 1,157 the previous year.

County Executive Ken Ulman said he also believes that development activity is picking up, based on his conversations with people in various parts of the business.

"What we're clearly seeing gives us the optimism that we have seen the worst," he said. "Everything we see tells us things are picking up."

In the final three months of 2009, the county issued another 400 building permits, according to Jeff Bronow, county planning research director. Of those, 244 were issued in December, he said, including for Alta at Regency Crest, a 150-unit apartment complex for people 55 and older. Construction just began on the site on Rogers Avenue just east of U.S. 40, near the county government office complex.

There are another 7,338 units in the processing pipeline, the report said, mostly as part of large phased projects such as Maple Lawn in Fulton, Turf Valley in Ellicott City and several along U.S. 1 just north of Route 175. The giant, 30-year Columbia downtown redevelopment waits in the wings, with zoning just approved Feb. 1.

Despite all that, commercial construction declined further last year, the report said.

Instead of the 3.5-million-square-foot annual pace set at the boom's peak in 2004-2005, the county issued permits for 1.1 million square feet of new commercial space last year. That's a drop from 1.5 million square feet the previous year, and down from 2.2 million square feet the year before that. No building permit has yet been issued for the giant 160,000-square-foot Wegmans grocery store off Snowden River Parkway, though store officials insisted Tuesday that they are still moving forward with the project.

Driving all the bad news was the loss of about 5,300 jobs in Howard from the first quarter of 2008 to the same period of 2009, the report said.

Still, Ulman and Richard W. Story, Economic Development Authority CEO, are optimistic.

"That's looking in the rear-view mirror," Story said about the report. "I'm looking out the windshield. All the signs I see are positive," he said, especially in the corridor between Baltimore and Washington where Howard County is located. "I think we're going to have a shortage of commercial space," as thousands of new federal jobs come to the area.

"With the contractor world, it is now sinking in that it's real," Ulman said about the predicted federal job growth.

Howard officials feel the county is well-positioned to benefit from the transfer of federal defense jobs and contractors to Central Maryland through next year as part of the Base Realignment and Closing process and a new emphasis on cybersecurity at the National Security Agency. Some of those people will want to live in Howard County, they believe, which is helping to spur plans for new homes along the U.S. 1 corridor, including three urban-style projects proposed for the three MARC commuter train stations in Howard along the border with Anne Arundel County.

The upward trend in residential development appears even clearer comparing figures from the full calendar year 2008 to 2009. Bronow said the number of building permits increased from 1,066 in 2008 to 1,480 in 2009. Still, he cautioned, builders have a year to use a permit once it is issued.

In the report, those 1,157 permits issued from October 2007 through September 2008 represented the lowest number of permits issued since 1979, when the county first began keeping track, and it represented a 39 percent decline from the 1,899 issued from October 2006 to September 2007. At the county's development peak in the 1980s, 3,000 homes a year were being built.

In that earlier February 2009 report, McLaughlin despaired that things might get even worse, but now she said she's "cautiously optimistic" that the worst of the recession has passed.

Still, developers aren't sure the recovery will be very swift.

"I think it's a 'U' recovery," with a longer, flatter bottom, "not a 'V' recovery," with a sharp increase, said Russ Dickens, a partner in Ellicott City's Elm Street Development and the president of the Howard County chapter of the Homebuilders Association of Maryland.

The number of homes being built and sold might be increasing, Dickens said, but prices are down. The report confirms that.

All home prices in Howard are down 10.7 percent on average, with the median price for single-family detached homes down 11.8 percent, from $525,000 to $463,000. For townhouses, median prices dropped 8 percent from $337,000 to $310,000, and for condominiums, there was a 13.5 percent drop of the median price from $252,000 to $218,000.

The number of sales also fell 12 percent from 3,864 to 3,403. At the peak of the housing bubble in 2005, more than 6,900 homes changed hands in one year, the report said.

Regionally, Elkridge and Ellicott City continue to be the hot spots in the county, accounting for a combined 61 percent of all residential construction. The southeastern part of the county accounted for 18 percent, while Columbia and the western rural areas were at 10 percent each.

The county's Adequate Public Facilities Ordinance, which uses an allocation system for permits to control growth along with built-in delays for school crowding or traffic gridlock at nearby intersections, has delayed 248 new units - all in Elkridge.

The idea that the worst might be over brought little cheer to county budget director Raymond S. Wacks, who is looking at a potential revenue shortfall of $20 million this fiscal year and even lower revenue projected for the fiscal year starting July 1.

"The other issue is that values are down," he said. "At lower prices, it's about the same amount of revenue" from real estate taxes.