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Higher interest rates slow pace of new home building in Kansas City

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Posted at 11:50 AM, Mar 09, 2023
and last updated 2023-03-09 23:20:33-05

KANSAS CITY, Mo. — Home builders across Kansas City believe higher interest rates are to blame for a slow start in single-family new home starts in 2023.

The Home Builders Association of Greater Kansas City said Thursday that the area had 173 new home starts in January, a decline of 24 percent from December 2022.

Of the new home starts, Kansas City, Missouri, topped the list with 29 units. Overland Park was second with 24. Olathe, Belton and Liberty completed the top five cities, combining for an additional 40 units.

A spokesperson said Kansas City’s trends are similar to those at the national level, with both local and national homeowners “balking at the higher, somewhat volatile interest rate environment.”

Will Ruder, KCHBA executive vice president, says that despite the slow start to 2023, existing pent-up demand and a limited supply should eventually push the number of permits up.

“Housing starts are always going to lag home sales numbers,” Ruder said in a press release. “Given the increasing number of sales we’ve seen at the outset of this year, coupled with a historically tight level of inventory, I expect to see the number of permits gradually increase as the year progresses.”

CNN reported last month new home construction has fallen across the country in January, the fifth-straight month of declines.