Housing in the past several years prior to 1964 has seen single-family dwelling starts stabilize between 900, 000 and 1,000,000, while multi-family starts increased sharply from less than 300, 000 to over 600, 000 by 1963. Flushed with easy mortgage credit, apartment builders built in advance of demand and had to curtail their activities during 1964 so that by year end the seasonally adjusted annual rate was around 450, 000 units. Single-family units also declined during the year but bottomed out in July and have shown some tendency to recover since that time. When considering the housing industry one must recall that it is marked by wide regional differences. Just as the Western and Southern sections of the country led the growth in housing which took place in the early 60's, it is the West, and principally California, which led the latest downturn. Now, while other sections of the nation appear to have started a reversal of the trend, the West has failed to respond, thereby delaying a complete recovery for the nation as a whole. A reading of the California building permit activity for the early part of the year does not inspire confidence for an immediate solution of their housing ills. Furthermore, recent indicators which report residential contract awards and estimates of new residential construction thus far in 1965 add a note of discouragement. On the other side of the ledger the non-housing sector again shows signs of strength for 1965, although it will be difficult to match the 8% improvement in new construction attained in 1964. However, reports of contract awards and construction expenditures indicate that the non-housing sector will show actual increases in physical volume above that registered in 1964. -5-