Production of new single-family homes across California slowed slightly in May but continued to exceed the pace set a year ago, according to statistics released today by the California Building Industry Association.

May’s housing starts report (as measured by building permits issued) showed that permits for single-family homes in California totaled 13,490, down 4.8 percent from April but 6.3 percent above the same time period in 2003. Total housing permits – including permits for the volatile multifamily market – numbered 17,352 in May, down 3 percent from the month before and down 4.8 percent from May 2003.

Alan Nevin, CBIA’s new chief economist, said housing production for the first five months of the year strongly indicate that California housing starts this year will be at the highest level since 1989.

“It is highly likely that California will break the 200,000-unit level this year, exceeding the 192,000 of 2003. To date this year (through May), single-family units permitted are running 11 percent ahead of last year and it should be possible to exceed the 150,000 mark if a sufficient number of lots remain available,” Nevin said.

“On the multifamily side, the 2004 total will be heavily dependent on the start-up of several major projects in the urban areas of California. Most of those multifamily units will be condominiums, including a substantial number of mid- and high-rise units. The multifamily units permitted do not include apartment-to-condominium conversions, but would include new condominiums in buildings converted from other uses.”

For the first five months of 2004, total housing start numbers – compiled by the Burbank-based Construction Industry Research Board – show a 2 percent increase compared to 2003.

Nevin also said the continued strength in California’s housing industry is further proof that there’s no “housing bubble” in the state.

“Based on the state’s population growth of nearly 600,000 a year, combined with the continuing lack of enough homes and apartments to meet the demand, there is little chance that the housing market will collapse,” Nevin said. “Standing inventories of new homes are at essentially zero. You can’t have a housing bubble if we aren’t building enough houses to handle the demand.”

CBIA President Sherman D. Harmer Jr., a San Diego homebuilder, said the lot shortage mentioned by Nevin is a major factor in the escalation of housing prices and the fact not enough homes are being built. He said SB 558 by Senator Denise Moreno Ducheny (D-San Diego), is designed to help ease that shortage by establishing a certain and reliable means of designating land for housing.

“Housing is as important to the economy as other infrastructure, such as water and highways,” Harmer said. “Without an adequate supply of housing, there will be a very limited amount of economic growth for California.”

The California Building Industry Association is a statewide trade association representing more than 6,000 businesses – home builders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals.


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