California building permits tumble to 16% below average

"My trusty spreadsheet reviewed Census Bureau data on California building permits, focusing on how the first half of 2025 compared with historical trends dating to 1988. Statewide, 49,400 permits were filed in the year's first six months. Minus 2020 - when news of coronavirus' emergence shut down much of the economy - the last time a year started more slowly was 2014. This year's first-half permitting was a 3% drop from a year earlier and 14% below the pandemic-era building boom in 2020-2023."

"Why is construction cooling? Elevated mortgage rates have made it hard for many new projects to pencil out profitably. The building rush in those pandemic-era days of historically cheaper mortgages was overdone and left numerous developers with large numbers of unsold homes or vacant apartments. The overall economy, particularly under the new administration's unconventional policies, is creating unease among construction executives and consumers alike."

"Single-family homes are the hardest hit. Politely put, these builders have been very conservative with their plans since the Great Recession. California had 29,500 permits filed for houses in the first half, down 7% in a year, 6% below the 2020-2023 average, and 23% slower than the 37-year pace. Multifamily developers, primarily building apartments, filed permits for 19,900 units in the first half."

California recorded 49,400 housing permits in the first half of 2025, a 3% decline year-over-year and 14% below the 2020-2023 pandemic-era surge. Permitting is 16% below the 37-year average pace. Elevated mortgage rates have reduced project profitability and pandemic-era overbuilding left excess unsold homes and vacant apartments. Single-family permits totaled 29,500, down 7% year-over-year and 23% below the 37-year pace. Multifamily permits reached 19,900 units, up 5% year-over-year but 24% below the recent surge and slightly below long-run averages, comprising 40% of permits. National permits totaled 725,400, down 4%.

Read at The Mercury News