As Housing Market Slows, the Supply Continues to Grow

This spring, the region's housing market is visibly slower than it was a year ago, with much higher inventories of homes for sale and fewer transactions. However, it appears that developers aren't dialing back their production of new housing by much, especially for large, multiunit properties.

Local governments issued permits for 8,154 new units of housing in the first three months of 2006, compared with 8,455 in the comparable period a year earlier. That's not much of a drop, but it continues a steady decline since 2003 in the number of units of new housing being put into the development pipeline. It is too soon to tell whether the pullback in permits will be enough to help stabilize housing inventory.

One particularly worrisome element is the balance between single-family and larger properties. The number of permits issued for single-family homes was down 14 percent to 5,464. In projects with five or more units of housing, such as condominium and apartment buildings, the number of permits issued rose by 32 percent, to 2,683 units authorized.

That comes even though the condominium market is the sector already grappling with the most new supply. Far from pulling back on their construction of new multifamily housing, builders are taking out permits to build more even faster, adding more to the copious supply.

-- Neil Irwin