Developers in Southern California have put the brakes on plans to build single-family homes, with 21 percent fewer permit approvals in the last two months.
While the year started at a record pace, home buying slowed over the summer. In response, Southland developers ended a single-family home permitting boom by cutting their pace by a fifth, the Los Angeles Daily News reported.
The newspaper crunched building permit data for Los Angeles, Orange, Riverside and San Bernardino counties from the Census Bureau and compiled by the St. Louis Federal Reserve Bank.
In the first half of the year, new single-family houses were approved at a rate of 2,240 homes a month, the busiest six months for home building plans since 2007. The permitting boom was 15 percent higher than last year’s start – and 42 percent above the 2015-2019 average.
Then came inflation and rising mortgage rates, putting typically expensive new homes out of reach for many buyers. Overall home buying from June to August hit a record low.
So local developers applied the brakes, obtaining building permits in July and August at a 1,780 monthly pace — 21 percent slower than the year’s breakneck start.
The Inland Empire, a hotbed for home building in Southern California, had the summer’s biggest chill, with July and August permitting 32 percent below the first-half pace, according to the Daily News.
In Los Angeles and Orange counties, summer permits slowed 5 percent. Across California, permits slowed 9 percent.
The states with the biggest summer permitting slowdown included Nevada (45 percent off first-half pace), District of Columbia (down 41 percent), Maryland (34 percent decline), and Arizona and Utah (off 31 percent).
At the same time, developers were mixed about pulling building permits for apartments and condominium projects, following a slow year for multifamily development.
In the first half of the year, the SoCal region’s multifamily permits ran 1,910 a month — 1 percent above last year and 10 percent below 2015-2019. The pace stayed the same for July and August.
In L.A.-Orange County, the summer started with 5 percent fewer multifamily permits compared to the first half of the year. The Inland Empire, with a small multifamily market, jumped 38 percent. The rest of California fell 6 percent from this year’s start.
Builders’ sales in the four counties for the first eight months of the year were down 13 percent from the same period last year.
— Dana Bartholomew
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