REAL ESTATE : New Home Sales Dip; Builders Pull ‘in Their Horns’

Sales of new homes are slower these days after the boom years of 1987 and 1988, and local builders are getting more cautious.

That is clear from a look at some recent statistics released by the Construction Industry Research Board, an industry group that tracks building permits issued by local governments in Orange County. Because a building permit is the last stage before construction, permits are a good way to keep track of how many homes are being built.

Construction is down considerably, the research group says. As of September, local governments had issued 6,242 permits to build single-family houses.

Last year, according to the research board, governments issued permits for 8,759 single-family houses during the first nine months.

This year, 6,441 permits were issued for multifamily units through September; last year, the total was 9,575 units. The total number of permits issued so far this year is 12,683, compared to 18,334 last year.

What’s going on?

“Nobody wants to be caught short with a lot of inventory in the event of a downturn,” says Kelly McDermott of the consulting firm Market Profiles. “Everybody’s pulling in their horns.”

Ironically, builders are seeking government permission to build just as many units as ever, McDermott said. It’s just that builders are building the approved ones in much smaller increments these days.