Construction of single-family houses fell in California last year to the lowest level in 25 years as builders in the Golden State cut back their production dramatically in response to softer sales. According to statewide data compiled by the Construction Industry Research Board, permits for 112,300 new homes, condominiums, townhouses, and apartments were issued statewide, down nearly 32% from the level recorded in 2006 and 100,000 units less than in the most recent peak year of 2004. Multifamily construction -- both for-sale and rental properties -- was down 21%, to 44,307, while single-family construction dropped by 37% to 67,993, the lowest number of starts since 51,160 starts were recorded in 1982. However, construction picked up in December as builders rushed to pull permits before new, more expensive building codes were set to go into effect, and housing industry spokesmen say they are hoping it is a sign that a recovery will soon be at hand, perhaps by the third quarter of 2008. "The combination of declining interest rates, increasing the conforming loan rate, and improvements in the FHA lending practices will lead to a more rapid recovery than initially anticipated," said Alan Nevin, chief economist of the California Building Industry Association.

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