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Home Building Remains Slow Through October

Housing: In Orange County, permits issued for apartments and condos were fewest in seven years and far below demand.


New home building activity in California remained sluggish in October, dismaying state officials and exacerbating the housing shortage troubling most coastal counties.

Builders statewide pulled permits last month at a rate that would result in 132,500 homes being built this year, well below the 156,000 housing units originally anticipated by the state Finance Department, the agency said Wednesday.

"It was a disappointing month," said Ted Gibson, chief economist at the state agency.

Though the rate is 3.6% higher than a year earlier, it is a bit lower than September's, and the total number of apartments, condominiums and single-family houses built this year will fall below 150,000 units, Gibson said. To keep up with projected growth, the state would have to build at an annual pace of as many as 250,000 homes.

The slow rate of construction has helped to push home prices up, especially in coastal communities where rents and sales figures have reached records. Economists say buyers and renters can expect to pay even more in the coming months.

"Basically, we're seeing very little relief to this tight housing market," Gibson said.

The state agency's monthly figures show once again that developers are building fewer apartments and condominiums, though single-family construction has remained steady.

The number of multifamily homes dropped in October to an annual rate of only 24,200 units, the lowest level in more than two years, according to the agency. That's a 34% decline from the previous October's rate of 36,900 condominiums and apartments.

At the local level, figures are not seasonally adjusted and fluctuate greatly, sometimes moving simply on one large project. Still, the raw numbers show that multifamily construction has slowed considerably.

In Orange County, builders took out permits for 151 apartments and condos last month, an 86% drop from the previous October when an unusual spike resulted in 1,113 permits for such housing. Even so, last month's figure was the lowest October number in seven years for multifamily construction. Overall, builders in the county took out permits on 680 homes last month, the most since July.

In Los Angeles County, housing starts fell 5.2% last month to 894 units, the second-lowest total recorded by the county this year, from 933 homes the previous October.

So far this year, Los Angeles, the nation's largest housing market, has posted permits for 13,622, its highest number of units in at least four years, even though the construction falls short of meeting demand.

Nationwide, the rate of construction slowed to 0.1% in October, the Commerce Department said last week. Analysts had been expecting builders to match September's stronger 0.7% increase.

Local real estate experts say plans for much-needed large-scale apartment complexes have faced greater opposition by homeowners, more stringent approval processes and more challenges from environmentalists.

Whatever weaknesses are emerging nationally or statewide, the demand for housing in California means brisk sales of new homes and low vacancy rates at apartment complexes. The activity seems robust to builders.

"We look at what's happening on a regional basis in Southern California, and even though the national numbers are showing some signs of slowing, the Southern California numbers are not," said Scott Allen, president of Citation Homes in Irvine.

Allen said the company will close sales of 200 homes in Orange County and the Inland Empire this year, and he expects a 30% increase in closings next year.

At Brookfield Homes in Costa Mesa, Carina Hathaway, a senior vice president, said her division expects to close on 700 homes this year in Orange, Los Angeles and Ventura counties and to sell 900 more next year.

"We have not felt a weakening in consumer confidence or in our sales rate," she said.

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