That is the lowest annual total for Kansas City since 1991 when 6,310 single-family homes were permitted. During the final month of the year, local home builders pulled permits for a seasonally adjusted 385 single-family housing units, down 7 percent from November.

Yet despite the adversity of the past year, home builders closed a disappointing year for housing with optimism that the upheaval of the past year will position the industry for a recovery in 2008 as an improving job market and low mortgage rates spur consumers back into the housing market.

“The slowdown in new-home starts was not unexpected and it was needed to reduce new-home inventories,” said HBA Executive Vice President/CEO Tim Underwood. “While the drop in construction activity was more than we expected, I believe the home-building community is more optimistic looking forward than it was a year ago.”

The reason for cautious optimism comes from some good news occurring in 2007. The slowdown in construction activity had the desired effect of reducing speculative new-home inventories. According to the Kansas City Regional Association of Realtors, new-home listings are down 15 percent from the same time last year and more than 1,000 housing units have been shed from inventory since the peak reached in mid-2006. Another positive sign for future new-home sales is a recent drop in mortgage rates. The average for a 30-year fixed-rate mortgage is down more than a quarter point from a year ago. Forecasts call for mortgage rates to remain low through 2008.

On the local front, the housing industry was encouraged by stronger than expected employment figures that showed Kansas City adding almost 19,000 jobs in 2007 with forecasts calling for another 19,000 new jobs in 2008. The forecast from the Mid-America Regional Council also called for the construction industry to add 1,600 jobs during the coming year.

“Building the job base and creating new households are both essential in helping to boost the housing market,” Underwood said. “This is critical to helping grow the local economy and in avoiding a slowdown beyond just the housing sector.”

While home builders are concerned about warning signs of a broader economic downtown, Underwood said the industry is encouraged that the Federal Reserve and leaders in Washington will make housing a priority in 2008 by keeping interest rates low and easing the credit crunch that has affected some consumers. He also cited recent steps taken by the Bush Administration to assist homeowners with mortgage issues and legislation in Congress that would reform FHA lending.

 “Chairman Bernanke’s recent comments that the Federal Reserve is ready to take substantive action to support growth were great news for housing,” Underwood said. “There are more steps that can and should be taken at the federal, state and local levels to help boost the housing market.”

Underwood said 2007 was also a frustrating year for the home-building community that saw the local housing market dragged down by weakness in national housing numbers that are skewed significantly by large markets where housing bubbles existed. A recent forecast from the National Association of Home Builders showed that much of the country’s housing market fundamentals are solid outside the handful of locations where overheated markets led to a bust in starts and prices, such as in California, Florida and the Southwest, or in locations where the economy is struggling such as Michigan.

“While issues relating to subprime lending, increased foreclosures and falling housing values have impacted some parts of the nation, Kansas City has fared much better than average,” Underwood said. “We have much lower subprime lending and foreclosure rates than the national average, and forecasts from experts such as Moody’s Economy.com call for no price correction in Kansas City. In fact, local new-home prices were up 5 percent in 2007 from a year ago. While we need to take steps to ensure an increase in foreclosures does not harm our communities and our neighborhoods, our region is poised for recovery as consumers reenter the housing market in larger numbers.”

Kansas City, Mo., lead the list of top-permitting cities in 2007 with 1,258 single-family homes permitted. Olathe ranked second with 609 units, followed by Lee’s Summit with 490. Rounding out the top 10 are Overland Park, 355 units; Kansas City, Kan./Wyandotte Co., 334; Blue Springs, 265; Gardner, 255; Platte County, 226; Lenexa, 218; and Shawnee, 207.

Among metro counties, Johnson County led the way with 29 percent market share, followed by Jackson County with 23 percent market share and Clay County with 17 percent. Cass and Platte counties each accounted for 8 percent of new-home permits in 2007, followed by Wyandotte and Leavenworth counties at 6 percent and Miami County with 2 percent.

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.