CONSTRUCTION SPENDING, HOUSING STARTS CONTINUE TO SLOW

The annual pace of construction spending continued its 10-month slowdown in January, falling 1.2 percent from a year ago to a seasonally adjusted annual rate of $1.18 trillion, according to a recent report from the U.S. Census Bureau.

Residential construction spending declined 12.7 percent compared with one year earlier, standing at a rate of $585 billion, while the value of nonresidential construction activity rose 13.5 percent to a rate of $595.3 billion, according to the report.In California, data from the California Building Industry Association (CBIA) report a similar decline, with new home construction falling 21 percent during January when compared with the construction pace recorded a year earlier.

Based on the number of building permits issued, 9,798 new housing units were started throughout the state in January, with single-family units accounting for 68 percent of the starts.

"Building permit activity for the first month of 2007 continues to show the hesitancy of home builders to build ahead of sales. Inventory statewide has been reduced substantially during the past six months and that should bode well for a return to more normal production when buyer interest returns," said CBIA Chief Economist Alan Nevin.

**Taken from the California Association of Realtors Bulletin, dated March 7th, 2007.