Despite a significant increase in multifamily housing starts, California’s overall residential real estate construction in June was down 10.9 percent from a year ago, the California Building Industry Association announced Friday.

According to data compiled by the Construction Industry Research Board, total housing starts, as measured by building permits issued, dropped to 19,175 in June, down from 21,523 in June 2005.

Last month, building permits were pulled for 12,292 single-family homes statewide, down 24.9 percent from 16,373 pulled a year earlier. For multifamily housing — which includes condos and apartments — 6,883 permits were pulled last month, up 33.7 percent from 5,150 permits in June 2005.

In his midyear housing forecast issued at PCBC The Premier Building Show last month, CBIA Chief Economist Alan Nevin said that for the remainder of 2006, new-home construction in California is expected to continue cooling off from 2005’s strong production levels as the housing market adjusts from a superheated state to more normal conditions.

“Although starts for the year are down 12 percent compared to the first six months of 2005, California builders are on target to begin construction on between 170,000 and 180,000 units for 2006,” Nevin said.

Nevin predicts that multifamily construction will remain extremely strong in most markets and expects starts to total between 45,000 and 55,000 units — about the same as last year’s levels — but single-family starts are expected to drop to between 125,000 and 135,000, compared with nearly 155,000 in 2005.

“Several metropolitan areas had a major increase in multifamily permits, predominantly related to vertical condominium construction in their urban cores.” Nevin said. “The principal areas with gains are Los Angeles, the Bay Area and Orange County.”

Nevin attributes the slowdown to a substantial unsold inventory of homes — both under construction and completed. He says that the depletion of that single-family inventory is under way as builders are offering concessions throughout the state.

Layne Marceau, 2006 CBIA chairman and a San Francisco Bay Area home builder, says that housing seems to be returning to a “normal” market, where buyers have choice and sellers have to price their properties right in order to sell them.

“The market is much different than it was a year ago,” Marceau said. “Last year, we had waiting lists for homes before we even broke ground, but this year it’s a different story. Inventory is moving a little slower, but that makes it a great time for buyers, as builders are getting creative and offering incentives to attract them.”

The California Building Industry Association is a statewide trade association representing more than 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.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription