Economists and Builders Call for Action on Affordability
By Jeanene Dunn
At the KCHBA’s 2026 Economic Forecast Breakfast in January, housing economists Robert Dietz, Ph.D., and Stanley Longhofer, Ph.D., delivered a consistent message: while economic conditions are stabilizing, housing supply remains the defining challenge shaping affordability and long-term economic health.
National Outlook: Stability Returns, Pressures Remain
Dietz, chief economist and senior vice president of economics and housing policy for the National Association of Home Builders, reflected on 2025 as a year marked by elevated mortgage rates, policy uncertainty and delayed business investment. Looking ahead to this year, he expressed cautious optimism as inflation moderates, interest rates ease and economic growth steadies.
“Trying to manage inflation solely through higher interest rates isn’t the answer,” Dietz said. “The real solution is increasing housing supply — especially attainable housing — so demand pressures ease naturally.”
Mortgage rates are expected to hover near 6 percent in 2026, assuming current economic conditions hold. Dietz emphasized that this level reflects broader economic fundamentals rather than market distress and warned that affordability challenges will persist without meaningful increases in housing production.
Kansas City Housing Market: Inventory Is the Constraint
Longhofer, director of the Center for Real Estate at Wichita State University, reinforced that view with a regional lens. He noted that 30-year fixed mortgage rates near 6 percent are historically normal in a healthy economy and not the primary obstacle facing buyers.
“The real issue in Kansas City is inventory,” Longhofer said. “We’re sitting at about 2.5 months of housing supply, well below the four months needed for a balanced market.”
That shortage, he explained, is the result of years of underbuilding following the Great Recession. As a result, despite affordability pressures, Longhofer expects Kansas City home prices to rise about 5 percent over the next year, driven by sustained demand and limited supply.
Audience Q&A: Progress, Policy and Perspective
During the audience question-and-answer session, both economists addressed whether progress is being made nationally. Dietz noted that the estimated housing supply deficit has narrowed from roughly 1.5 million homes two years ago to about 1 million today, largely due to increased townhouse and higher-density construction.
“There’s no single fix,” Dietz said. “This is going to take time, different housing types and sustained commitment at the local level.”
Longhofer also addressed concerns about mortgage “lock-in,” noting that housing decisions are driven more by life changes than interest rates alone.
“People move because their lives change, not just because rates change,” he said.
When Policy Meets the Jobsite
That local focus was reinforced by Joe Christensen, founder and owner of Cardinal Crest Homes and 2026 KCHBA president. Christensen connected the economists’ analysis to the realities builders face through the association’s advocacy campaign; Let Builders Build.
“About 24 percent of the cost of a home is tied to regulations, and another 25 to 30 percent comes from waiting on permits and inspections,” Christensen said. “Those delays add real costs and make attainable housing harder to deliver.”
Why Housing Supply is an Economic Imperative Together, the economists’ data and builders’ on-the-ground experience point to a clear conclusion: housing is no longer a secondary concern. It is a primary economic driver. Without meaningful increases in home production and fewer barriers to building, affordability challenges will persist.
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