On the player board there are 3 spaces for tools. Player can't have more than 3 tools at the same time (permanent tools). There are 5 spaces for buildings. Therefore, I assumed 5 is a limit of huts a player might own. Is that correct?
No, there is no limit to the number of huts a player can have. The space on the board is simply done that way for design; you do not have to put 1 hut in each space.
From the rulebook, page 7:
The player places the acquired building on one of the corresponding spaces of their board. Once a player has more than 5 buildings, he stacks them on these spaces.