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New home building continues downward spiral
Inventories of existing homes growing
By: Gene Hanson
Home foreclosures, higher interest rates and tighter restrictions on home mortgages are all playing a role in the continuing downward trend in the home-building industry.
According to the Home Builders Association of Greater Kansas City, the number of new permits issued in May was 559, down more than 9 percent from April and off 40 percent from a year ago.
The Northland did not fare well either. New home building permits in Clay County are off 24 percent from a year ago, and in Platte County, home-building activity is down 54 percent from a year ago.
In the Northland, Liberty and Kearney were the only areas that posted an increase in activity.
Higher interest rates have played a role.
“It's critical for consumers considering a new home purchase to realize the record-low mortgage rates we experienced in recent years were the exception and not the norm,” said Tim Underwood, Home Builders Association executive vice president and CEO. “We expect mortgage rates to rise in the future as bond yields rise and the Federal Reserve continues to take an aggressive approach toward inflation.”
He said an emphasis on progressive, sustainable development approaches including mixed use development, traditional neighborhood design and housing for age 50-plus consumers will help provide a better mix of housing choices demanded by consumers.
The evidence of a housing glut is more prevalent in existing homes for sale than in new home inventories. According to the Kansas City Regional Association of Realtors, existing home inventories were up 6 percent in May to 15,883, 12 percent more than a year ago.
The numbers have been exacerbated as buyers who stretched to purchase homes are going into default at record levels, dumping more homes on the market.
None of the eight counties in the Kansas City metropolitan area showed positive numbers in home building.
In addition to the drops in Clay County, Cass County activity dropped 55 percent from a year ago. Others included Jackson County, down 24 percent; Johnson County, Kan., down 34 percent; Leavenworth County, Kan., down 20 percent, Wyandotte County, Kan., down 31 percent; and Miami County, Kan., down 65 percent.
Business Editor Gene Hanson can be reached at 389-6638, or at ghanson@npgco.com.
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According to the Home Builders Association of Greater Kansas City, the number of new permits issued in May was 559, down more than 9 percent from April and off 40 percent from a year ago.
The Northland did not fare well either. New home building permits in Clay County are off 24 percent from a year ago, and in Platte County, home-building activity is down 54 percent from a year ago.
In the Northland, Liberty and Kearney were the only areas that posted an increase in activity.
Higher interest rates have played a role.
“It's critical for consumers considering a new home purchase to realize the record-low mortgage rates we experienced in recent years were the exception and not the norm,” said Tim Underwood, Home Builders Association executive vice president and CEO. “We expect mortgage rates to rise in the future as bond yields rise and the Federal Reserve continues to take an aggressive approach toward inflation.”
He said an emphasis on progressive, sustainable development approaches including mixed use development, traditional neighborhood design and housing for age 50-plus consumers will help provide a better mix of housing choices demanded by consumers.
The evidence of a housing glut is more prevalent in existing homes for sale than in new home inventories. According to the Kansas City Regional Association of Realtors, existing home inventories were up 6 percent in May to 15,883, 12 percent more than a year ago.
The numbers have been exacerbated as buyers who stretched to purchase homes are going into default at record levels, dumping more homes on the market.
None of the eight counties in the Kansas City metropolitan area showed positive numbers in home building.
In addition to the drops in Clay County, Cass County activity dropped 55 percent from a year ago. Others included Jackson County, down 24 percent; Johnson County, Kan., down 34 percent; Leavenworth County, Kan., down 20 percent, Wyandotte County, Kan., down 31 percent; and Miami County, Kan., down 65 percent.
Business Editor Gene Hanson can be reached at 389-6638, or at ghanson@npgco.com.