The number of building permits issued for new homes plunged in July as builders struggled to find buyers. The industry is poised to have the lowest number of starts since record-keeping began in 1954, according to the California Building Industry Association.

Developers have cut prices and offered incentives to entice buyers off the sidelines and away from bank-owned properties. That said, builders who survive could enjoy a strong rebound after foreclosures wash through the marketplace, the association president said.

"When the dust settles...there could be a shortage of new homes to buy. We are building less than a third of the new housing units needed to keep up with California's growth and that will ultimately drive up prices," said Robert Rivinius, the president.

Only 139 single-family home permits were issued in Fresno County in July, a whopping 62.8% decline from a year previously and down 71.3% from June. In Tulare County, starts were off 31.2% July 2007 and 34% from the previous month.

The story was the same almost everywhere in California. Statewide, permits were off almost 50% from July 2007.