Sacramento Region built 10 percent of new California housing

The Sacramento Bee reports:

Nearly one in every 10 homes, apartments and condominiums started last year in California rose in the Sacramento area -- led by Sacramento's Natomas area, the cities of Lincoln and Elk Grove, and unincorporated Yuba County, according to the California Building Industry Association.

In fact, builders in California produced 10 percent of the nation's housing, the CBIA said.

The 20,000 housing starts in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties in 2005 signaled the region's continued role in a massive inland migration to relatively cheaper home prices. Other areas of California that shouldered large-scale residential construction last year included the Inland Empire of Riverside and San Bernardino counties, much of the San Joaquin Valley and parts of San Diego and Los Angeles counties.

Among the report's findings:

• Lincoln's 2,689 new single-family homes ranked fourth in California behind unincorporated Riverside County, and the cities of Lancaster and Bakersfield.

• Elk Grove ranked fifth with 2,428 new homes. Lincoln and Elk Grove, like Temecula, Moreno Valley and Stockton, ranked among California's top 10 fastest-growing small cities last year, state demographers say.

• The city of Sacramento finished sixth for condominium and apartment construction with 1,176 starts. It ranked seventh statewide in overall housing starts at 2,958. Two other Central Valley cities, Bakersfield and Fresno, were in the top five.

"Twenty thousand permits is a very good number for the region, even though they trailed off some in the last quarter," said John Orr, president and chief executive officer of CBIA's Roseville affiliate, the North State Building Industry Association.

The number is expected to drop by at least 2,000 homes this year in the six-county region, Orr said. Area builders are scaling back amid a glut of existing homes for sale and rising interest rates, among other reasons.

Roseville-based homebuilder consultant John Schleimer said builders have begun backing out of land deals just as buyers are backing out of new homes.

"I don't know of a major homebuilder who is not in renegotiations or didn't walk away from lots in the last three months," said Schleimer, owner of Market Perspectives.

This is a major sign that higher interest rates have cut demand.