Sales, new construction show housing market gaining ground

Increasing sales of existing homes and an uptick in new construction last month indicate the U.S. housing market is gaining ground. Local real estate agents say they're seeing similar trends in the Cape Girardeau area as well.

For the first eight and a half months of 2012, the number of residential single-family homes sold in Cape Girardeau County is up 10.4 percent compared to the same period in 2011 with a total of 580 single-family units.

Nationally, home sales jumped to the highest level in more than two years in August, according to the National Association of Realtors. Sales rose 7.8 percent to a seasonally adjusted annual rate of 4.82 million, the most since May 2010. Construction of new single-family homes in August also occurred at the fastest rate in more than two years, the U.S. Department of Housing and Urban Development announced Wednesday.

"Mortgage interest rates are lower than this time last year, so they certainly help sales," said Bill Cole, president of the local Multiple Listing Service and broker/owner of Realty Executives in Cape Girardeau.

Low mortgage rates were the main motivator for Brandon and Jessica Pederson, who bought a new home in Cape Girardeau this summer.

"We decided since mortgage rates are at historic lows, it was a fantastic opportunity to buy a home that we're going to spend at least the next 20 to 30 years in," Brandon Pederson said.

The Pedersons bought a home about twice the size of the Cape Girardeau home they'd been living in since 2007.

"We have a growing family and hopefully we're going to expand and fill the place," said Brandon Pederson, who has a 3-year-old child.

While their interest rate on their previous home was 6.2 percent, their new mortgage rate is 3.75 percent, he said.

"My clients seem to be motivated to buy because of the incredibly low interest rates coupled with very reasonable home prices," said Pederson's real estate agent Shad Burner, with Exit Realty-Thomas Meyer Associates. "It's a combination that is hard for any prospective homebuyer to ignore."

Prices are inching up though, according to MLS data.

The median price is up 4 percent from $125,000 last year to $130,000 this year, Cole said.

The national median home price was $187,400 in August, up 9.5 percent from a year ago, according to the National Association of Realtors.

Mortgage rates will hold steady and may go even lower as the result of the Federal Reserve's aggressive plans to purchase large sums of mortgage-backed securities, said John M. Thompson, president at The Bank of Missouri.

"We can anticipate having ongoing and continued low mortgage rates, based on what the fed has said they are going to continue to do, through 2015," Thompson said.

Cole said that reducing mortgage rates even further would give the housing market an additional shot in the arm.

Although the economy hasn't recovered at the pace or level many would have hoped for, Thompson said as it relates to homeownership, people are becoming more confident.

"Those that were concerned about their ongoing employment now feel more stable about that. Those that have jobs, while one year ago they weren't confident enough to say I'm going to go ahead and buy. Now they feel more comfortable," he said.

Young couples getting married and growing families also continue to create demand for home sales, Thompson said. There is pent-up demand from those who put off buying or upsizing.

Sales of lots for home construction are up, Cole said, and Thompson said he's seeing more new construction loans in homes across all of The Bank of Missouri's markets than he has in three years.

"We're even seeing some builders re-enter the market to build new single family homes and we haven't seen that in two years," he said.

Both building materials and labor are competitively priced right now, Thompson said.

During the past several years, foreclosures pushed down prices of existing homes, making it more expensive per square foot to build a new home than purchase an older home.

While locally foreclosures are still influencing the market, only 31 of this year's homes sold in Cape Girardeau County have been foreclosure or bank owned properties, Cole said.

In 2011, foreclosure documents were filed for 172 properties, according to Recorder of Deeds Scott R. Clark. That is the lowest number of foreclosures recorded since 2008.

mmiller@semissourian.com

388-3646

Pertinent address:

Cape Girardeau, Mo.