Housing production in California is expected to continue slowing for the remainder of the year as the market shifts to more normal conditions, according to the midyear housing forecast by the California Building Industry Association.But starts for the year are still expected to be the fourth-highest in 17 years, the forecast says. Speaking at the Pacific Coast Builders Conference, CBIA chief economist Alan Nevin said he now expects overall housing starts in California this year to total 170,000-180,000, down 15%-20% from 2005. Multifamily construction remains extremely strong in most markets and is expected to total 45,000-55,000 units, about the same as last year's level. But single-family starts are expected to drop to 125,000-135,000, compared with nearly 155,000 in 2005. The single-family sector remains solid in most of Southern California, but starts are likely to be significantly below last year's level in San Diego, the San Joaquin Valley, the Sacramento region, and the Bay Area. "The decline in single-family production in those areas is the result of a combination of rapid price run-ups in the upscale market and rising interest rates," Mr. Nevin noted. The economist also projected that prices will continue leveling off in most metro areas, with annual increases of less than 5% statewide. "The rapid run-up in prices is over, but we do not see prices dropping significantly, if at all," he said.

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