Southern California homebuilding has experienced a cooling trend due to high mortgage rates, according to a recent analysis of Census Bureau building permit data. In the three months ending in July, developers submitted permits for 15,109 housing units in Los Angeles, Orange, Riverside, San Bernardino, and San Diego counties, marking a 13% decrease from the previous year. However, this figure was still 7% higher than the five-year average ending in July 2022.
The slowdown in housing permits was seen across the region, with Los Angeles and Orange counties experiencing a 14% drop in permits, the Inland Empire seeing a 13% decrease, and San Diego facing a 14% decline. The decline in multifamily permits was particularly notable, as apartment builders pulled back due to an oversupply of rentals and stalled rent hikes.
Single-family permits also dipped, with homebuilders facing rate-skittish house hunters. Southern California saw a 7% decrease in single-family permits, with varying trends in different subregions. Overall, the construction chill is expected to impact both renters and homeowners, leading to disappointment among house hunters, apartment seekers, and policymakers who had hoped for continued growth in the homebuilding sector.
The analysis was conducted by Jonathan Lansner, a business columnist for the Southern California News Group. For more information, Lansner can be reached at jlansner@scng.com.
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