Total New-Home Starts Decline Again in February, CBIA Announces
Multifamily starts increase, resale market shows signs of revitalization signaling that the bottom could be near
March 26, 2008, SACRAMENTO — New-home starts in California continued to decline in February as homebuilders continued to grapple with problems in the housing and credit markets, the California Building Industry Association reported today.
According to housing permit data supplied by the Construction Industry Research Board, total housing starts in California, as measured by building permits issued, dropped 28 percent in February when compared to the same month a year ago to 6,855 units. Production of single-family homes fell 60 percent while construction of multifamily units increased 36 percent when compared to February of 2007.
In February, permits were pulled for just 2,540 single-family homes statewide, down 60 percent from February 2007 and down 5 percent from the previous month. Multifamily housing starts — condos and apartments — totaled 4,315, up 36 percent from February 2007 and up 112 percent from the previous month.
During the first two months of the year, single-family home production was down from the same period last year by 60 percent with 5,215 units permitted, while multifamily home production was nearly identical to 2007 levels with 6,348 permits pulled, down only 0.2 percent. Total new home production was down 41 percent.
CBIA Chief Economist Alan Nevin said the rise in multifamily construction was expected due to increased demand for apartments. He noted that the strongest activity was seen in the San Francisco Bay Area, Orange County, and Los Angeles markets, and although single-family production has been relatively dormant in the first two months of the year, he remains optimistic that production will gradually tick upwards later in the year.
“The federal government’s two dominant actions this past month – increasing the conforming loan limit and reducing the Federal Funds rate – have already generated a substantial increase in resale home traffic and offers,” Nevin said. “It is likely that the revitalization of the resale market this spring will gradually induce activity in new-home production.”
CBIA President and CEO Robert Rivinius said that while signs that the market may be gradually improving are welcome, state and local policy-makers can help jump-start the new-home market in California and boost the economy by passing CBIA-sponsored reform legislation as soon as possible.
“Our sponsored legislation is aimed at giving builders more time to complete projects that have already been approved and deferring the collection of impact fees to time of sale,” Rivinius said. “In doing so, builders will be able to quickly respond to projected increases in market demand and help keep prices as low as possible, which especially will help first-time buyers looking to own their own home. Finding ways to streamline the planning process and stimulate home production is vital to the entire economy.”
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The California Building Industry Association is a statewide trade association representing nearly 7,000 businesses – homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals. A recent study determined that homebuilding generates approximately $60 billion a year to the California economy and creates an estimated 526,000 jobs statewide. 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.
