California's housing production is expected to drop slightly in 2006, the California Building Industry Association reported today.

The 2006 Housing Forecast, authored by the association's chief economist, Alan Nevin, projects that between 185,000 and 205,000 homes, condominiums and apartments will be built in 2006 – down from about 212,000 in each of the previous two years.

"The annual demand for new homes in California continues to be in the 240,000 range, but the home-building industry is able to provide only 80 percent of the total need," Nevin said.

Land constraints and local government policies are contributors to the high cost of housing, he added.

Single-family production statewide should be between 135,000 and 145,000 units, compared to about 156,000 single-family housing starts in 2005 and 151,000 in 2004, according to the forecast. Nevin said most of the decline would be in the high-end segment in coastal areas, while more-affordable areas, such as the San Joaquin Valley, should see construction continue at higher levels.

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