August 11, 2009 – (RealEstateRama) — The Kansas City residential construction market showed further signs of stabilizing in June as permits posted a slight gain from May, according to statistics compiled by the Home Builders Association of Greater Kansas City (HBA). The organization reported a seasonally adjusted total of 187 single-family homes permitted in June, up from a revised total of 185 homes permitted in May.
June’s activity marked the busiest month for home builders during the first half of the year. Through the first six months of the year, metro communities combined for 932 single-family home permits. In most years, that would put the metro on annual pace for just under 1,900 units.
Yet builders remain optimistic for a stronger second half of the year, according to HBA Executive Vice President/CEO Tim Underwood. He said signs point to stronger interest from consumers and the $8,000 first-time buyer tax credit, which expires Dec. 1.
“There is a clearly pent-up demand ready to jump into the market,” Underwood said. “We continue to see improving consumer traffic through model homes and starts for new homes under contract. Low mortgage rates and the tax credit should be powerful motivating factors for buyers in the second half of the year.”
Underwood compared the current situation to the housing market recovery coming out of the 1981-82 recession. The metro area issued 196 single-family permits in June 1982 and totaled 937 permits for the first half of the year, numbers virtually identical to this year’s numbers. Residential construction in the second half of the year soared 172 percent, offering a positive omen for the current recovery.
Yet the biggest challenge to the housing market recovery may be ensuring an adequate supply of inventory. According to last month’s report from the Kansas City Regional Association of Realtors, new-home listings are at their lowest levels in seven years. While credit is flowing well to consumers thanks to an increase in FHA lending and loan purchases by Fannie Mae and Freddie Mac, the lending environment is much more difficult for builders and developers.
“It is absolutely critical Congress and the Federal Reserve take steps to open the frozen credit market for construction lending,” Underwood said. “At a time when more and more consumers are appearing ready to return to the housing market, we face the very real possibility of a shortage of housing choices if we can’t replenish vanishing supplies. We can’t let a lack of lending activity stifle an economic recovery.”
Kansas City, Mo., led the list of top-permitting cities through June with 263 single-family homes permitted. Olathe ranked second with 136 units, followed by Gardner with 43 and Overland Park with 41. Rounding out the top ten were Kansas City, Kan./Wyandotte County with 40 homes; Lee’s Summit, 39; Leavenworth, 28; Platte County, 22; Blue Springs, 21; and Smithville, 20.
The Home Builders Association of Greater Kansas City (HBA) is the voice of the housing industry and the source for housing information. Comprising more than 1,000 member companies, the HBA represents an industry that contributes more than $2.5 billion to the Kansas City economy and supports more than 36,000 jobs in the Greater Kansas City metropolitan area