California Housing Starts Down 37 Percent

SACRAMENTO, CA - New home production in California was down 37 percent in May compared with the same period a year earlier, as builders continued to compete for buyers with a foreclosure-flooded resale market, the California Building Industry Association reported. Statewide, governments issued 7,035 residential building permits last month, down 36.6 percent from May 2007 but up 12.3 percent from 6,234 in April, the CBIA said. Single-family-home production dropped 52 percent in the past 12 months while multifamily building fell 5 percent.

In Greater Sacramento, 601 homebuilding permits were issued in the Sacramento/Arden-Arcade/Roseville metropolitan statistical area in May, a 19.1 percent decline from 743 permits issued a year ago and a 13.2 percent drop from 692 permits taken out in April.

Total new-home production statewide was off 46 percent in the first five months of 2008 compared with the same period a year ago, the building industry association said. The association's research arm, the Construction Industry Research Board, has forecast 79,000 new housing units will be built this year in California -- the lowest annual total since 1954, when the industry began keeping accurate statewide counts.

Single-family building permits pulled in the first five months of the year fell nearly 80 percent from 65,042 in that period of 2005 to 15,254 in the January through May period of 2008, said Alan Nevin, CBIA chief economist.

Increased demand for new apartments is helping buoy the multifamily housing sector, he said. "As noted in earlier monthly reports, the decline in condominium construction has been largely offset by the development of apartments on land formerly intended for condominium development," Nevin said.

Chances for a major residential market recovery by the end of 2008 are looking less likely as demand remains down, he said. "We see little change in the status of the new residential construction market for the balance of 2008 as home builders opt to wait out a return of demand," Nevin said.