Projected new-home starts for 2008 would be lowest yearly total on record
SACRAMENTO — California new-home production in April continued to lag behind last year’s production levels, increasing chances that new-home production would fall to the lowest level in recorded history, the California Building Industry Association reported today.
Total housing starts in California, as measured by building permits issued, fell 42 percent in April when compared to the same month a year ago to 6,197 units, according to housing permit data supplied by the Construction Industry Research Board. Single-family home production dropped 55 percent while construction of multifamily units dipped 15 percent when compared to April of 2007.
In April, permits were pulled for 3,341 single-family homes statewide, down 55 percent from April 2007 but up 7 percent from March to the highest level so far this year. Multifamily housing starts — condos and apartments — totaled 2,856, down 15 percent from April 2007 but up 68 percent from the previous month.
During the first four months of the year, single-family home production was down 59 percent from the same period last year with 11,685 units permitted, while multifamily home production fell 28 percent with 10,907 permits pulled. Total new-home production was off 48 percent.
While year-over-year declines are beginning to shrink and month-to-month comparisons show modest increases, CIRB is still forecasting a 30 percent dip in total new-home production compared with 2007 levels.
“CIRB’s outlook for 2008 as a whole is 79,000 total new units, down 30.1 percent from 2007 and the lowest annual total on record, with records going back to 1954,” said Ben Bartolotto, CIRB’s Research Director.
The lowest yearly total for new-home starts on record, according to CIRB, was in 1993 with 84,656 units permitted.
“Still, it’s a matter of time before the housing sector shows clear signs of the beginnings of a recovery as credit markets stabilize and unsold inventories decline,” he said.
CIRB is now forecasting a 16 percent increase in production for 2009 at 92,000 units, signaling that the bottom of the market may be near.
CBIA President and CEO Robert Rivinius said that while some semblance of a housing recovery is definitely welcome, the projections for 2008 and 2009 are still extremely low and point to the need for reforms at the state and federal level to jump-start the vital housing industry.
“Just two years ago, a study determined that homebuilding was a $58 billion a year industry in California, employing more than a half-million people. Today, with production off by nearly two-thirds, that impact is far less and the economic impacts of the downturn are rippling throughout the economy,” Rivinius said.
“Furthermore, if the current projection comes true and we build the lowest number of homes since at least World War II this year, the current increase in affordability could quickly turn around when the pent-up demand for new housing starts outweighing the supply.”
Rivinius urged state lawmakers to pass CBIA-sponsored legislation that would extend current subdivision maps for up to two years, giving builders more time to build projects that would otherwise expire and to defer most impact fees until a home actually sells, and for Congress to make permanent higher conforming loan limits and to enact a temporary tax credit for first-time homebuyers.
“Together, these measures would help restore consumer confidence, help clear the existing inventory of foreclosed homes, and allow builders to be able to quickly respond to a market turn-around, putting people back to work and increasing needed tax revenue for cities and the state.”
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The California Building Industry Association is a statewide trade association representing more than 7,000 businesses – homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals. More information is available on the Association’s Web site, www.cbia.org.
The Construction Industry Research Board (CIRB) is a nonprofit research center established in 1974 to provide statistical information on the California building and construction industry. More information is available on the CIRB Web site, www.cirbdata.com.
