New Home Construction Cut To Three Year Low In Southern California

Oversupply and softening demand are prompting a slowdown in new-home construction in Southern California. The Orange County Register reports:
Southern California builders, stuck with the largest supply of unsold homes in seven years, have slashed construction to the slowest pace since 2016. First-quarter data from MetroStudy shows 3,750 new homes went unsold in the four counties covered by the Southern California News Group — an increase of 688 units in a year or 22% and up 37% vs. the five-year average. It was builders’ largest inventory of unsold units since 2012’s first quarter.
As a result, the building pace cooled. In the quarter, Southern California had 8,829 units under construction, down 1,950 or 18% in a year but up 1% vs. the five-year average. It’s still the slowest development pace since the start of 2016.
Local builders are struggling with numerous selling challenges. According to CoreLogic, builders started 2019 with new home sales down 25% from a year ago. First quarter closed sales totaled 2,988 units. Builders bet too heavily on the upscale market, which has been hurt by a pullback of foreign, mainly Chinese, buyers. The more affordable parts of the market have been slowed by higher mortgage rates.

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