Homebuilding shrinks in California, but not as fast as the U.S.

Permits in state fall 6% to 111,221, with nearly even split of single-family and multifamily

Homebuilding Drops in California, but Falls Faster in U.S.
(Illustration by Kevin Rebong for The Real Deal)

Homebuilding permits across the Golden State fell last year, but not as fast as across the U.S.

California developers filed permits for 111,221 homes last year, 6 percent fewer than in 2022, the Orange County Register reported, citing figures from the National Association of Home Builders.

At the same time, builders in 49 states and the District of Columbia pulled 1.26 million permits, 11 percent fewer than the year before. Nine states had increases.

California ranked third among states for the number of permits filed last year.

Of those, 57,959 were for single-family houses, an 8 percent decline from 2022. Multifamily permits across the state totaled 53,262, a 3 percent decline; in the Inland Empire, however, multifamily permits shot up 89 percent.

California permits equaled 2.8 per 1,000 residents, the lowest ratio since 2020, according to the Register. It’s also above the average 2.2 permits per 1,000 residents pace since 2008.

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The Great Recession changed how builders build: from 1990 to 2007, California permitting averaged 4 per 1,000 residents.

Across the nation, builders filed 851,268 single-family home permits, a 6 percent decline. Six states were up for the year. They filed 508,107 multifamily permits, down 19 percent, with 15 states reporting an increase in filings.

The overall decrease in permits was generally attributed to an uncertain economy, higher mortgage rates and fears that too many apartments were being built, according to the Register.

Within the Golden State, Northern California saw a 10 percent drop in building permits last year, compared to a 6 percent drop in Southern California.

In Los Angeles and Orange County, builders pulled 30,691 permits last year, 6 percent fewer than in 2022. Of those, 11,810 permits were for single-family homes, a 7 percent increase. Some 18,881 permits were for multifamily, a 13 percent decrease.

In the Inland Empire, builders pulled 19,710 permits, up 21 percent from 2022. Of those, 11,924 were for single-family homes, down 2 percent. Some  7,786 permits were for multifamily — an increase of 89 percent.

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— Dana Bartholomew