A total of 5,264 single-family units have been permitted through the first half of 2006, down 13 percent from the 6,046 units permitted through the same period in 2005. Despite lower permit activity, the metro remains on pace to eclipse the 10,000-unit barrier for new-home starts for a fifth straight year.

The lower permit totals come at a time when economists are forecasting a “soft landing” for the housing industry from the record pace established in recent years. With mortgage rates remaining low by historic standards, opportunities for new-home ownership are expected to remain highly favorable, according to HBA Executive Vice President/CEO Tim Underwood.

“Low mortgage rates have certainly helped propel new-home construction to record levels during this decade and will continue to support homeownership opportunities for Kansas City’s families in the future,” Underwood said. “The recent slowdown in construction we are seeing is likely the result of rising construction costs fueled by higher material prices, higher taxes and fees on new-home owners and soaring land prices. The market is undergoing a transition to clear out inventory and adjust to the realities of flat household incomes and slightly higher mortgage rates.”

Underwood said low-density development patterns have artificially increased the price of new homes and resulted in dramatically higher infrastructure costs for roads, utilities and services. While mortgage rates will remain favorable for long-term homeownership, higher rates mean consumers will be seeking new homes at lower price points than in the recent past. Underwood said the most successful communities going forward will be locations that provide an array of housing choices comprising different styles and price points, ranging from first-time homebuyers to the upper-bracket market.

“The metropolitan region has a very vibrant luxury home market, but our challenge in recent years has been providing the homes demanded by the largest group of consumers, chiefly first-time home buyers,” Underwood said. “Neglecting this portion of the market will have serious consequences for our neighborhoods, particularly as consumers become more price-conscious.”

Kansas City, Mo., leads the region in single-family new-home construction through the first half of 2006 with 1,118 units. Olathe is second with 485 units followed by Overland Park with 311 and Lee’s Summit at 310. Rounding out the top 10 are Kansas City, Kan./Wyandotte County with 260 units; unincorporated Platte County, 233; Lenexa, 221; Independence, 173; and Raymore, 179; and Shawnee, 166.

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.