B of A predicted a strong state housing industry.

The industry had an excellent year in 1986 and is expected to turn in a strong performance this year, according to Bank of America’s latest California Housing Report. During 1986, total housing starts reached 270,896 units, an increase of 12% over 1985’s 241,771. Construction of new single-family homes increased 16.7% in 1986 to 130,020 units compared to the prior year’s 111,380. These gains illustrate the strong demand for housing in California generated by the drop in mortgage rates. Since mortgage rates are expected to stay near current levels in 1987, the state’s housing industry will be solid for the next 12 to 18 months, said Carl Mason, the bank economist who wrote the report.