California Housing Permits Plunge to Lowest Level in Over a Decade

California’s effort to address its chronic housing shortage has hit a major setback. According to a Southern California News Group analysis by Jonathan Lansner, housing construction permits in the state have fallen to their lowest point since 2014, excluding the pandemic lockdown period.

In the first half of 2025, California issued 49,400 permits for new housing, a decline of 3% from 2024 and 14% below the pandemic-era construction surge of 2020–2023. The pace is also 16% under the state’s 37-year average, a troubling indicator for a state already struggling with affordability and supply challenges.

Mortgage Rates and Economic Policy Slow Projects

The slowdown is tied to multiple factors. Elevated mortgage rates have made it harder for projects to remain financially viable, leaving some developers with unsold homes or empty apartments. Lansner also pointed to broader economic unease under the Trump administration’s unconventional policy decisions, which have introduced greater caution among both builders and potential buyers.

Single-Family Homes Bear the Brunt

Single-family home construction has been hit hardest. California issued 29,500 single-family permits in the first six months of 2025 — down 7% from last year and 23% below the long-term average.

Multifamily construction, meanwhile, offered a modest counterweight. Builders filed 19,900 apartment permits, marking a 5% increase from 2024. Still, that total sits 24% below the 2020–2023 surge and slightly under historical norms. Multifamily units made up 40% of all permits this year, a dip from the pandemic high of 46% but still above the long-term average of 34%.

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National Trends Reflect Broader Weakness

California’s slowdown mirrors a nationwide cooling in residential construction. Across the U.S., 725,400 permits were filed in the first half of 2025, a 4% drop year over year and 13% below the pandemic-era peak. Unlike California, however, national activity remains somewhat healthier, running 7% above the long-term average.

Single-family construction remains the biggest drag nationally as well, with 483,800 permits filed — down 6% from last year. Multifamily permitting, at 241,600 units, was relatively stable compared with 2024 but still trails the heights of the pandemic boom. Multifamily accounted for 33% of all U.S. permits, compared to 38% during the pandemic and a historical share of 29%.

Shifting Housing Composition

Lansner noted that while the overall numbers point to a cooling market, the type of housing being built continues to evolve. Multifamily projects, in particular, are playing a bigger role than in past decades.

The data suggests that, despite the slowdown, developers remain focused on higher-density housing that can better serve renters and urban markets. But with California’s permit activity running well below its historical pace, questions loom about whether the state can make progress toward meeting its housing demand and easing affordability pressures.

Originally reported by Vanguard Administrator in Vanguard News Group.