New-Home Construction Remains Stalled Despite August Gain
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New-Home Construction Remains Stalled Despite August Gain

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September 18, 2009 – (RealEstateRama) — Metro Kansas City new-home permits rebounded 7 percent from July’s activity but home builders say they are yet to see any major signs of a housing market recovery. According to statistics compiled by the Home Builders Association of Greater Kansas City (HBA) a seasonally adjusted total of 192 single-family homes were permitted in August, up from a revised total of 179 homes permitted in July.

Despite the August activity marking the best month for new-home permits this year and the best monthly performance since November 2008, it also underscored how much the local housing market continues to struggle. Permits remained 34 percent below last year’s numbers. From 2003 to 2008, the metro averaged 762 single-family permits for the month of August.

Greater Kansas City is also on pace for its worst year for new-home permits since the HBA began tracking data in the 1970s. A total of 1,335 permits have been issued year to date and 2,164 permits have been issued during the last 12 months. The previous worst annual performance for the metro came in 1981 when 2,430 homes were permitted.

HBA Executive Vice President/CEO Tim Underwood says the numbers do not paint a market ready for a recovery without lending reforms and homebuyer relief. He said home builders are encouraging the White House and Congress to extend and enhance the first-time buyer tax credit and address lending issues that are preventing builders from replacing dwindling inventories.

“According to research by the National Association of Home Builders, the decline in new-home starts has meant the loss of more than 21,000 housing related jobs here in Kansas City,” Underwood said. “We are not going to restore and recover those jobs until the new-home market is more affordable for consumers and builders and contractors are able to go back to work.”

Underwood said the $8,000 first-time home buyer tax credit has proven successful in stabilizing the existing-home market. However, the credit is due to expire Dec. 1 and has done little to provide tax relief for new-home buyers who typically already own a home and are ineligible for the credit.

“Expanding and enhancing the tax credit and unfreezing the construction lending market for builders and developers would go a long way toward boosting the economy,” Underwood explained. “We are not talking about a government bailout; we simply need to remove obstacles that are encouraging lenders to avoid residential construction projects, even for successful and performing loans.”

Kansas City, Mo., led the list of top-permitting cities through August with 337 single-family homes permitted. Olathe ranked second with 183 units, followed by Lee’s Summit with 65 and Overland Park with 61. Rounding out the top ten were Kansas City, Kan./Wyandotte County with 60 homes; Gardner, 57; Leavenworth 51; Platte County, 41; Blue Springs, 35; and Kearney, Leavenworth County, Lenexa and Shawnee, tied with 27.

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.

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