Builders Put On Brakes as 1990 Sales Skid 18%

The runaway housing market of the late 1980s is threatening to run out of gas in the 1990s

Sales of new homes for the second quarter were off 18.1% from last year’s pace. And according to a survey just released by the REal Estate Research Council of Southern California, the inventory of unsold new homes is at its highest level since 1985.

The slowdown is forcing builders to cut back substantially on construction, primarily in the single-family home market. Building permits, which forecast additions to the county’s housing inventory, point to a continuing decline for single-family homes.

For the first half of 1990, the number of permits issued for single-family homes was 47% lower than for the same period in 1989, but the number of multifamily housing permits increased 14%. However, the value of planned single-family home construction showed a less precipitous drop--sliding only 19%--indicating that the projects that have been planned tend toward the upper end of the price scale.

UNSOLD NEW HOMES IN ORANGE COUNTY Including attached and detached homes as well as units still under construction: July 1987: 2,302 July 1988: 324 July 1990: 3,029 BUILDING PERMITS FOR NEW HOUSING Permits for nearly half as many single-family homes were issued for the first half of 1990 as for the first six months of 1989; permits for multifamily units increased by 14% 89: 4,171 90: 2,218 Single Family -47% decline 89: 4,719 90: 5,396 Multifamily 14% increase TYPE OF HOUSING, 1989 VS 1990 2--4 unit multifamily -2.5% 5 or more units 1.0% Single family -19.1% The value of permits issued for single-family homes was lower by more than 19% for the first half of 1990 than for the same period in 1989. VALUE OF RESIDENTIAL BUILDING PERMITS For all types of residential construction, including remodeling and additions, the value of permits issued has been lowered for 1990 than for the same period in 1989. Jan.--June ‘89: $1,112 million Jan.--June ‘90: $849 million --23.6% decline