Building Permits on the Decline

Despite a rise in new building permits issued metro-wide for the month of February, early signs show that numbers will decline for the month of March as people and company’s heed government issued stay-at-home orders.

In the greater Kansas City area, single family building permits totaled 474 during February, “the highest amount since October of last year and 240 more than February 2019,” according to statistics compiled by the Home Builders Association of Greater Kansas City or KCHBA.

The year-to-date total of 830 is an impressive 77 percent increase over the first two months of 2019 and the increase was spread across the eight-county metro region, stated KCHBA. Along with single family permits, multi-family project permits also increased during early 2020, with 819 issued. 

In February, single family activity in Kansas City, Mo. tops the most active city list with 133 permits issued, followed by Olathe with 96, Kansas City, Ks/Wyandotte County at 73, Belton at 68, Lee’s Summit with 63 and Overland Park with 51 single family permits, according to KCHBA.

However, with the unemployment rate nearing 10 percent at the start of April due to layoffs and furloughs, home building and remodeling recorded a net job loss of 4,500 in March nationally, said Robert Dietz, chief economist of the National Association of Home Builders.

“Given the size of these labor market declines — and with more to come — NAHB will be revising its macroeconomic outlook in the coming days,” said Dietz, noting that the acceleration of job losses and sudden stop of economic output will “imply significant declines for home construction and remodeling during the middle of 2020.”

The Federal Housing Finance Agency has stepped in and announced several construction loan processing flexibilities from Fannie Mae and Freddie Mac, including allowing desktop appraisals on new construction loans and other measures to make it easier to process and expediate loan closings.

“These loan processing flexibilities will expedite loan closings and help keep home buyers, sellers, and appraisers safe during this national emergency,” said FHFA Director Mark Calabria.

And on another positive note, nationally “construction continues to move forward on the majority of the 539,000 single family homes and 671,000 apartment units now in the construction pipeline,” said Dietz.