Housing Starts Tumble in State

Housing starts dropped sharply in November in most of the state’s major metropolitan areas, led by steep declines in single-family home construction, the California Building Industry Assn. said Tuesday.

But housing starts for the first 11 months remained on pace with 2004’s robust numbers and analysts expect this year to be one of the best on record for new construction.

“I wouldn’t read too much into the month’s numbers because things can get volatile at the end of the year,� said John Karevoll, an analyst at DataQuick Information Systems, a La Jolla-based real estate research firm. “Builders are planning on a fairly stable market.�

November’s figures, though, reflect a gradual softening of the 5-year-old California housing boom.

Single-family home construction, which accounts for the bulk of California’s new housing activity, fell 17.2% statewide in November compared with October, and tumbled 18% from a year earlier.

Single-family housing starts fell 23.3% in the Inland Empire in November from October, 23.8% in Orange County and 24.1% in the San Diego region. However, the Los Angeles-Long Beach metropolitan area posted a 3.3% increase for the month.

Including the construction of multifamily units, housing starts in California totaled 14,021 in November, down 5.3% from October, and off 23.6% from a year earlier.

Local prices in the resale housing market, while still at near-record highs, have leveled off in recent months, Karevoll said, and that has prompted many sellers to pull their homes off the market. This also has taken potential buyers out of the new-home arena, he said.

As a result, new-home builders are “very cautious,� said Alan Nevin, chief economist for the state building association.

One reason builders in California were reluctant to start many single-family projects last month was because there was an ample supply of unsold homes, Nevin said.

“The slowdown in November will give builders an opportunity to clear out their inventory,� he said.

Two weeks ago, Los Angeles-based KB Home, one of the nation’s largest home builders, posted a 66% jump in fourth-quarter earnings and forecast 2006 earnings of $11.25 a share, up from $9.53 a share this year.

But on Friday, the Commerce Department reported that sales of new single-family homes fell 11.3% nationwide in November, the largest drop in nearly 12 years. The report hurt shares of KB Home, D.R. Horton and Pulte Homes over concerns that the home-building industry was starting to cool off.

In the Southland, the median price for homes last month hit a record $479,000, but sales of new and previously owned homes fell 3% from October, according to DataQuick.

For the first 11 months, single-family home construction in California was up 3.5% to 145,119 units, compared with 140,145 for the first 11 months of 2004, the California Building Industry Assn. said.

Multifamily starts were down 9.5% through November, to 48,443 units from 53,507.

Overall, new housing activity for the first 11 months was flat at 193,562 units, down just 90 units from the same period last year, the builders group said.

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Bloomberg News was used in compiling this report.