Housing Production Falls to Record Low in January

Housing Production Falls to Record Low in January

February 24, 2009

SACRAMENTO – Housing production in January posted the lowest annual rate on record, the California Building Industry Association announced today, but CBIA officials expressed hope that state and federal tax credits enacted in the past few weeks would soon begin to cause new-home sales to increase and thereby increase housing production.

According to statistics compiled by the Construction Industry Research Board, just 2,007 permits were pulled throughout California during the month of January, down 57 percent when compared to the same month a year ago and also down 57 percent from December. On a seasonally adjusted basis, the annual rate of production for total new units during the month was just 27,800, the lowest on record.

Robert Rivinius, CBIA’s President and CEO, said the grim housing starts numbers prove once again the need for the $10,000 state tax credit for buyers of new homes that was included in the state budget package, along with the $8,000 federal first-time buyer tax credit enacted by Congress and the Obama Administration’s proposals to require lenders to work with borrowers more closely to keep them in their homes and reduce the tidal wave of foreclosures that has washed over the economy.

“We once again want to thank the Legislature and Governor Schwarzenegger for enacting the state tax credit because we believe it can have a real impact on boosting sales and help restore consumer confidence,” Rivinius said.

In January, single-family permits totaled just 1,283, down 52 percent from January 2008 and down 33 percent from December, while multifamily permits totaled 724, down 64 percent when compared to January 2008 and down 73 percent from the previous month. The seasonally adjusted multifamily rate was the lowest since February 1994.

Based on these numbers, CIRB is now forecasting production of 56,600 total units for 2009, down 13 percent from the record-low 64,756 produced in 2008. Annual statewide records date back to 1954, while comparable figures for seasonally averaged monthly statistics have been compiled since 1976.

Rivinius noted that continued weakness in the housing sector will continue to weaken the overall economy.

“Until the homebuilding industry gets back on its feet, the entire economy will be affected, as will state and local tax revenues,” Rivinius said. “The sooner builders get back to work and start creating jobs, the better for everyone.”