California housing production dropped about 10 percent from January 2005 to January 2006, the California Building Industry Association announced today.

According to data compiled by the Construction Industry Research Board, housing starts (as measured by building permits issued) totaled 12,357 in January – a decrease of 1,430 units compared to January 2005. The total includes 9,036 single-family homes (down 10.4 percent from January 2005) and 3,321 apartments and condominiums (also down 10.4 percent from January 2005).

The research board is a nonprofit research center that provides statistical information on the California building and construction industry.

Overall, starts were down 8 percent from the previous month of December. Single-family starts dropped 6.8 percent and multifamily starts dropped 11.1 percent.

CBIA Chief Economist Alan Nevin said that construction is expected to pick up in the second quarter of the year. He also noted that production for 2006 is only slightly off from 2005.

“Despite the naysayer predictions for 2006, the permit count for the first month of 2006 is only modestly off from January 2005,” Nevin said. “As the first quarter of 2005 was one of the ‘hottest’ periods in recent memory, it is notable that the statewide permit count is down by around 1,000 single-family units and only 384 multifamily units in the first month of the year. That modest decline falls within the bounds of our forecast for 2006.”

The CBIA Housing Forecast, authored by Nevin, predicts that California’s housing production in 2006 will drop slightly compared to the near-record construction activity in 2004 and 2005 to between 185,000 and 205,000 homes, condominiums and apartments, compared with approximately 213,000 in 2004 and 208,000 in 2005.

Layne Marceau, 2006 CBIA Chairman and a San Francisco Bay Area home builder, said that production is not keeping up with the demand for new homes and apartments.

“The annual demand for new homes in California continues to be in the 240,000 range, but this year production will only be about 80 percent of the total need, which is hurting potential and existing home buyers struggling to enter or move up in the market,” Marceau said, blaming a shortage of land that is “zoned and ready to build new homes, condos and apartments.”

The California Building Industry Association is a statewide trade association representing about 6,500 businesses, including home builders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals. A recent study determined that home-building generates approximately $60 billion a year to the California economy and creates an estimated 526,000 jobs statewide.


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