Home sales hit peak in '04

Sales of new homes rose to an all-time high nationwide in 2004 but not in the Cape Girardeau area, where 41 fewer homes were sold last year than in 2003.

The Commerce Department reported Monday that total U.S. sales of new single-family homes climbed more than 8 percent in 2004 to a record high of 1.18 million, up from 1.09 million in 2003.

Last year, 1,255 single-family homes were sold locally, according to the Cape Girardeau County Multi-List Service Inc., which tracks statistics in Cape Girardeau County and parts of Scott, Perry and Bollinger counties. The year before, 1,296 were sold.

Multi-List does not track homes sold by the owner.

Local real estate agents say those numbers don't tell the real story and that the national housing industry is just catching up to a "brisk" local home-buying market.

"Our sales have been up all along," said Kerry Johnson, a real estate agent with RE/MAX Achievers and president of the Cape Girardeau Board of Realtors. "So now that the rest of the nation has increased, it's not fair to say our growth rate is not what it should be."

The total value of homes sold locally did increase in 2004, Johnson said. According to Multi-List, the total cost of local new homes sold in 2004 was $150.9 million, up from $148.6 million in 2003. The average cost of a house rose from $114,226 to $120,226.

"It looks to me like the rest of the nation is just catching up," Johnson said. "If you compare Cape Girardeau to the rest of the nation over the past 10 years, then Cape will come out on top. It's more consistent."

Sales of both new homes and previously owned homes have set records for the past four years as home buyers have enjoyed the lowest mortgage rates in their working lifetimes.

Dr. Mike Devaney, Southeast Missouri State University finance professor who also is a real estate appraiser, agreed that the local housing market is still pretty healthy.

Devaney credits the housing boom to the aggressive credit easing undertaken by the Federal Reserve in 2001 as it fought to counteract the impact of the country's first recession in a decade.

However, since last June, the Fed has been gradually raising its benchmark federal funds rate, pushing it from a 46-year low of 1 percent, to 2.25 percent currently with another quarter-point increase expected Wednesday.

So far, the Fed's rate increases have had little impact on mortgage rates. Thirty-year fixed-rate mortgages last week dropped to 5.66 percent, compared with 6.25 percent in late June when the Fed started boosting rates.

"But I think the rates will continue to trend up over the next year," Devaney said. "I think that the numbers locally dropping reflect that. We are probably having fewer first-time home buyers and more people who are trading up into nicer homes."

Devaney said to expect more of the same in 2005, with total numbers staying about the same but the average cost of a new home increasing.

Contractors building a house on Chesapeake Avenue near Lexington Avenue in Cape Girardeau Monday said they've had plenty of work.

"It's been pretty steady for the past 2 1/2 years," said Steve Young, who owns Young Guttering in Cape Girardeau. "There are quite a few new subdivisions going in, plus low interest rates have helped a bit."

Sometimes interest rates and bottom lines aren't the biggest motivation for potential home buyers.

"Interest rates are important," said Emily Lavalle, who moved here from Columbia with her husband three years ago. "But we wanted a yard. We wanted land with our house. We wanted to not be in the middle of town and right on top of our neighbors. That was the biggest thing for us."

The Associated Press contributed to this report.

smoyers@semissourian.com

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