Hoping to avoid flooding the market with a glut of new homes, builders in San Diego and Riverside counties started construction on half as many single-family houses in October as they did in the same month a year earlier, a new California Building Industry Association report shows.

Builders initiated construction on 52 percent fewer houses in Riverside County, or 944 this October, compared with 1,972 a year ago, according to the report compiled by the Construction Industry Research Board for the association. At the same time, builders began erecting just 258 single-family houses in San Diego County, 47 percent less than the 482 in October 2005.

Housing production of all types was down throughout the state in October, but the drop was sharpest for single-family houses, industry sources said. Those single-family declines were concentrated in the San Diego, Riverside and Sacramento metropolitan areas, places where California's recent housing boom was hottest.

"Builders are concentrating on selling inventory of housing that is already built or near completion," said Borre Winckel, executive director of the Riverside County chapter of the Building Industry Association of Southern California. "It is very much driven by their need to try to clean up their balance sheets by year's end."

Winckel said builders remember all too well the bloated inventory they were stuck with during the 1990s after a period of overbuilding, and they want to avoid getting into a similar predicament.

"They don't want history to repeat itself," he said. "This time, our inventories are under better control."

Construction of multifamily condominiums and apartments declined sharply in Riverside County, from 284 units in October 2005 to 76 last month, the report indicates. At the same time, though, construction of condos and apartments in San Diego County increased from 151 units a year earlier to 573.

Even so, multifamily construction for the year to date is down 15 percent in San Diego County, from 6,628 units during the first 10 months of 2005 to 5,605, the industry report shows.

In Riverside County, multifamily construction is down 2 percent for the first 10 months of the year, from 3,840 apartments and condos in 2005 to 3,770.

Perhaps of most concern to economists is the year-to-date trend in the single-family sector.

In a clear sign that October's numbers were not a one-month aberration, the report shows that single-family construction totals for the first 10 months of the year are down 42 percent in San Diego County and 28 percent in Riverside County. San Diego's year-to-date total of 4,178 housing starts pales in comparison to the 7,154 recorded for the same period in 2005, and a 10-month total of 8,513 a year earlier. Riverside's year-to-date total of 19,010 single-family starts is well off the 2005 pace of 26,360.

Alan Nevin, director of economic research for MarketPointe Realty Advisors in San Diego and chief economist for the California Building Industry Association, cautioned against concluding that the sharply lower numbers for 2006 signal a housing market headed into the tank.

"It is not a crisis situation," said Nevin, whose association represents the state's 6,700 home builders and related businesses. "But they (builders) do want to get their inventory down to a comfortable level. And they won't pull any new permits until they have done that."

He predicted that building will rebound in the spring.

Robert Campbell, a San Diego economist who closely tracks the market and publishes a newsletter advising subscribers when and when not to invest in real estate, disagreed that a rebound is around the corner.

"This is clearly a normal cyclical downturn," Campbell said. "Welcome to the roller coaster ride of real estate. It goes up and it goes down, and now we're going down. This is going to be a very slow, painful downturn."

Christopher Thornberg, formerly with the widely respected UCLA Anderson Forecast and now a partner in an economic consulting firm, said construction won't rebound for some time because the leveling off of home values will squeeze homeowners' ability to buy bigger, more expensive houses.

"You're not going to be earning capital gains in this market for a long time to come," Thornberg said.

Thornberg subscribes to the theory that Southern California is in a bubble, meaning area incomes cannot sustain home prices at current levels.

"There's never been a housing bubble in California that has shaken itself out that quickly," he said, noting the market declined for several years in the 1990s before rebounding. "And this is absolutely the biggest housing bubble, price-wise, that we have ever had in California. This is not going to disappear overnight. Demand for (new) housing is going to be weak for a while."

While some of the sharpest declines can be found in San Diego and Riverside counties, markets are cooling throughout California. Statewide, production of new, single-family homes totaled 6,031 in October, down 47 percent from 11,330 in October 2005.

For the year to date, single-family production reached 95,142 at the end of last month, a 30 percent plunge from 135,871 for the first 10 months of 2005.

For all types of housing, including condos, statewide production was off 21 percent. The report showed builders requested building permits for 142,731 single-family houses, condominiums and apartments for the year to date, compared with 180,766 housing units at this time last year.

-- Contact staff writer Dave Downey at (760) 740-5442 or ddowney@nctimes.com.