Housing starts fell significantly in November in most parts of California, but starts for the year are on pace with 2004, the California Building Industry Association reported this week.
During November, housing starts as measured by building permits issued for single-family homes totaled 9,405, down 17.2 percent from October and down 18 percent from November 2004, according to figures compiled by the Burbank-based Construction Industry Research Board (CIRB).
Multifamily starts were up by 34.1 percent compared to October, to 4,616, but down 36.1 percent from November 2004. In all, builders started construction on 14,021 homes, condominiums, and apartments in November, down 5.3 percent from the previous month and down 23.6 percent from November 2004, according to an association announcement.
Alan Nevin, chief economist for the builders’ group, said the November drop-off was due, in part, to the need of builders to sell homes built or under construction.
“The November figures for single-family homes are down, but on a year-to-year basis are still up 5,000 over 2004,” Nevin said. “The slowdown in November will give builders an opportunity to clear out their standing inventory.”
CIRB research director Ben Bartolotto attributed part of the decline to the continued effect of the large increase in permits issued in September, just before new, more-expensive energy efficiency requirements went into effect Oct. 1.
On a year-to-date basis, Nevin noted, total permits were almost exactly even with the first 11 months of 2004 – 193,562 this year compared to 193,652 last year.
“Overall, through the first 11 months of the year, the total permits pulled are identical to those of 2004. We anticipate that 2005 will conclude with figures matching 2004, which was a very good year for the industry,” Nevin said.
Still, the softening production figures raise concerns that the state’s worsening housing affordability crisis is now limiting new construction, said Robert Rivinius, CBIA’s President and CEO.
“For the past several years, housing production has grown rapidly but has never caught up with demand,” Rivinius said. “That gap between supply and the need for new homes and apartments to house our state’s rapidly growing population has been the primary cause for spiraling housing costs, and it may be that we’ve reached a point where affordability is so low that production is going to decrease.”
He encouraged the state Legislature and other policymakers to work to increase housing opportunities in the state.
The California Building Industry Association is a statewide trade association that represents about 6,500 businesses – home builders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals.
The Construction Industry Research Board is a nonprofit research center established in 1974 to provide statistical information on the California building and construction industry.
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