Home permits rise in California, apartments fall to 12-year low

Developers in California are hot on single-family homes and cold on apartments.

Requests for single-family permits rose 13 percent from last year’s second half, while requests for multifamily permits fell 27 percent, the Orange County Register reported, citing figures from the U.S. Census Bureau.

From January through June, home builders filed for 31,653 single-family housing permits, up 13 percent compared to the last six months of 2023, and 14 percent more than the 10-year average.

Meanwhile, California multifamily permits hit a 12-year low, down 27 percent to 19,035 from the previous six months and 26 percent below the 10-year average. Last year, San Francisco green-lighted the building of less than 1,200 homes, a 13-year low.

Overall, California’s 50,688 housing permits fell 7 percent from the previous six months and 5 percent below the 10-year average.

The boost in home construction was more than offset by the decline in multifamily building. It implies that with more expensive single-family homes on the rise, housing affordability will take a hit because of fewer apartments in the pipeline, according to the Register.

Homebuilders filed 62 percent of California’s housing permits in the first six months of the year, the largest share since 2010, when the Great Recession hammered the economy. Developers are not only taking advantage of limited existing homes for sale, but the extra demand from potential buyers seeking the discounted mortgage rates offered by builders.

Across the nation, it was the best half in two years, as home builders filed for 511,900 permits,  up 10 percent from the previous six months and 19 percent more than the 10-year average.

Apartment developers, however, have pulled back sharply from their recent building boom.

Construction overshot demand, forcing rents to flatten and landlords to offer concessions to woo new tenants, according to the Register.

The state rental vacancy hit 5.2 percent in the quarter ending in June, the highest in a decade, according to the Census Bureau. Add higher mortgage rates, and multifamily development doesn’t pencil for most developers.

Nationally, it was the worst first-half start for apartment permits since 2020, with request for permits down 14 percent to 236,700 from the previous six months, and down 34 from the second half of 2022, the busiest six months since 1986.

Overall, U.S. apartment permits were 9 percent below the 10-year average.

— Dana Bartholomew

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