Building permits issued for single-family homes in California dropped 41.8 percent in August compared to August 2005, the California Building Industry Association reported today, and building permits dropped 5.9 percent compared to July 2006.

Meanwhile, total single-family and multifamily housing starts in August climbed 14.4 percent compared to July while falling 25.3 percent compared to August 2005.

A statewide total of 7,838 permits were pulled for single-family homes statewide, down 5.9 percent from July, while multifamily housing starts — condos and apartments – totaled 5,290, up 68.1 percent from the previous month, according to the report.

Building permits for a total of 13,128 homes, condos and apartments were issued in August, according to statistics compiled by the Construction Industry Research Board, a nonprofit research center.

For the first eight months of the year, the number of single-family building permits issued has fallen 24.7 percent compared to the same period last year. The number of multifamily building permits issued has risen 8.3 percent for the first eight months of the year compared to 2005.

CBIA chief economist Alan Nevin said in a statement that new-home construction in California is expected to continue to cool for the remainder of the year. Builders will continue to reduce their standing inventory of unsold homes that are under construction or completed, he said, and are now using aggressive marketing techniques to reduce their inventory.

“At the present rate, we anticipate that the inventory will be nearly depleted by the end of the third quarter,” he said. “From that point on, builders will only build what they can pre-sell.”

Multifamily construction activity should remain strong in most markets, he added, with starts roughly equivalent to last year’s level, while single-family starts are expected to fall 20,000 to 30,000 units short of last year’s level of 155,000.

“Permit activity through August indicates that California will achieve our forecasted level of 180,000 units permitted in 2006, which would still be the fourth-highest total in the past 17 years,” Nevin said. “Multifamily production continues to rise, with particularly strong activity in Los Angeles, Orange County, and the San Francisco Bay Area — much of it related to vertical construction in the urban core.”

Layne Marceau, 2006 CBIA chairman, said affordability is a major problem in the state. “For far too many California families, home prices today are simply not affordable — and even if the real estate naysayers’ predictions of a drastic market correction came true, housing would still be unaffordable for most first-time buyers,” he said.

The California Building Industry Association represents about 6,700 businesses, including home builders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals.

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