California Housing Fell Last Year for the First Time in 10 years

New home construction in California fell last year for the first time in 10 years and could drop more sharply this year, according to a report released Thursday that provided the latest sign of a cooling real estate boom.

Housing production could drop by as much as 11% this year — potentially bad news for a California economy that has depended on construction as its leading job creator.

A construction slowdown also could worsen the state's housing shortage. California needed as many as 250,000 new housing units every year to meet potential demand. More than 40% of all new jobs in California since 2001 were in construction or real estate-related fields. A slowdown could mean no increase or even a decline in construction jobs this year. Builders will be building fewer homes so they won't need to keep the same number of people on the payroll.

A construction slowdown coupled with steady demand would probably boost home prices. At the same time, home prices rose 16.5%. There are a lot of people out there wanting to buy a home, but they can't afford to.

The fall in housing production last year was largely attributed to a big drop in permits for condominiums and apartment buildings.