North Coast construction activity remained flat for the first three months of the year, and some industry leaders took solace that at least things aren't getting worse.

Contractors in Sonoma, Lake and Mendocino counties took out building permits worth $70 million in the first quarter of 2011, according to the Construction Industry Research Board, an industry-funded research center in Burbank. The amount, which includes all residential, commercial and other private projects, was down 1 percent from a year ago.

North Coast builders pulled permits to construct 123 single-family homes during the first quarter, up from 85 a year ago. But five years ago, permits totaled 519 for the same period.

For Sonoma County, 98 new house permits were issued for the quarter, compared to 54 a year ago.

Building group leaders said the numbers suggest the industry has hit bottom after three years of pain.

"At this point even flat looks good," quipped Keith Woods, chief executive officer for the North Coast Builders Exchange, a Santa Rosa trade group. "This is an industry that has been bleeding for so many years."

Across California, contractors received permits in the first quarter for nearly $5.9 billion worth of construction, up almost 5 percent from a year ago.

The research board is forecasting 55,000 new housing units this year, up 22 percent from 2010. Even so, analysts predicted 2011 will join the previous three years as the worst on record.

"We have nowhere to go but up," said Bob Glover, executive director of the Building Industry Association of the Bay Area.

Builders, he said, are cautiously optimistic of better times ahead as the economy rebounds.

"It will be a slow, slow climb," Glover said.

From 1997 to 2006, builders took out permits to construct from 1,900 to 3,000 new homes every year in Sonoma County. But during the last three years, the number of permits never exceeded 600 annually.

Builders repeatedly have said they can't build houses for as low as the selling prices of foreclosure homes and other distressed properties.

However, a few builders continue to construct new homes.

DeNova Homes of Concord held a grand opening Saturday for its 96-unit Southgate development in west Petaluma. Ten homes are under construction and seven models are finished and furnished, said Lori Sanson, an executive vice president. Homes start at $399,000.

The large number of foreclosures will continue to challenge builders, Sanson said. But many buyers prefer new homes "for that sense of security" that comes with a home warranty, she said. Buyers also prefer the ability to customize the new house.