California’s permits for new housing dipped to an 11-year low, minus the pandemic-era lockdowns.
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.
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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. This year’s permitting is also 16% below the 37-year average pace.
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.
Split picture
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.
That’s up 5% in a year but 24% below the 2020-2023 surge and 2% off the 37-year pace.
Multifamily has grown its share of new housing in recent years, representing 40% of all permits in the first half. Yes, that’s down from 46% in the pandemic construction surge, but both periods are well above multifamily’s 34% share since 1988.
Countrywide chill
California is not alone in this 2025 building chill.
Nationally, 725,400 total permits in the first half were off 4% in a year and 13% below the 2020-2023 surge.
But note a significant difference with California: U.S. permitting runs 7% above the 37-year pace.
Again, the drag is single-family home development. Its 483,800 first-half permits were off 6% in a year and 6% below the 2020-2023 surge. It stands 1% above the 37-year pace.
Nationwide, multifamily permits for 241,600 units in the first half were flat in a year and 24% below the 2020-2023 surge. It’s still 21% above the 37-year pace.
So, multifamily equaled 33% of all U.S. permits to start 2025, compared with 38% during the pandemic and 29% since 1988.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]
