MORAGA -- The malaise in California home building will hound the state for a while longer, a top state government economist told an East Bay gathering Wednesday.

Even worse, California is particularly vulnerable to ripple effects because the state depends on housing and home building for a greater share of its economic activity than other regions, said Howard Roth, chief economist with the state's Department of Finance.

The 100 attendees at the annual State of the Economy conference at St. Mary's College in Moraga gained insights into economic trends in California as well as how to create a sustainable environment in the East Bay.

A number of speakers said it is possible to create robust economic activity through green and clean technologies.

In his presentation, Roth provided an ominous assessment about real estate.

"I see no signs that the housing downturn will abate any time soon," he said during an interview after his speech.

An economist with the building industry in the state has completed a revised assessment of the housing market that echoes that estimate.

Alan Nevin, chief economist with the California Building Industry, said he has prepared a revised forecast that suggests housing construction will be even weaker in 2007 than initially thought. The revision is based a weak first quarter in home building in California.

"It appears it will be difficult to reach the levels for housing unit construction that we had originally projected last December," he said.


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The first prediction called for 170,000 housing units being built in California during 2007. Nevin now thinks the number could be about 155,000. That would be 14 percent below the 2006 home building total of 180,000 units. The 2006 totals also represented a 14 percent decline from the year before.

Roth warned that the weakness could be even more severe based on the first-quarter home building activity. The units constructed in the first three months in California, if extrapolated over a full year, would lead to a total of 118,000 single-family and multi-family residential units in California for 2007, he estimated.

Consumers will have to continue to spend at a brisk clip to buoy the economy, Roth said. That is because business investment and exports are going through a tough patch.

"To keep us out of recession, we need for consumers to continue to spend through the rest of 2007," Roth said.

George Avalos covers the job market, insurance and banks. Reach him at 925-977-8477 or gavalos@cctimes.com.