The latest figures on home starts and sales suggest the metro area is chugging ahead – particularly in new homes – and Eastern Jackson appears to be holding its own.

The latest figures on home starts and sales suggest the metro area is chugging ahead – particularly in new homes – and Eastern Jackson appears to be holding its own.

First, the encouraging news. Figures from the Kansas City Regional Association of Realtors and Heartland Multiple Listing Service show only Jackson and Cass counties had higher selling prices than a year earlier for both new and existing homes. Existing home prices in Jackson County rose 4.1 percent, to $128,292. That’s considerably shy of the average among the nine counties, which saw a 5 percent bump overall to $172,040. Only Platte and Wyandotte counties had declines, and Johnson County led the way, at $251,520.

But Johnson County was among the four counties that saw a decline in the price of new homes – even as the supply tightened. Still those prices were up 3 percent metrowide, including a 10.9 percent jump in Jackson County to $277,409. Platte and Cass counties saw similar gains.

The Realtors don’t break down numbers of sales by county, but metro existing-home sales hit 2,482 in June, a 12 percent gain from a year earlier and new-homes sales – a far smaller part of the market – hit 253, a gain of 32 percent. This should continue to translate to good news for real-estate agents, builders and sellers. In June 2011, there were 16,010 existing homes and 1,298 new homes on the market, and those had fallen to 13,253 and 1,090 last month. Pending sales are up 17 percent. Put another way, a 10-month supply of inventory has been cut to about seven – getting close to what the industry calls a balanced market, favoring neither buyer nor seller.

The Federal Reserve Bank of Kansas City sees much the same thing, though for a much larger part of the county, the plains and prairies from Kansas City to Denver and Cheyenne to Oklahoma City.

“Stronger residential home sales reduced home inventories and commercial construction activity grew in June,” the KC Fed said in the Beige Book report released last week. “A sharp increase in home sales reduced home inventories, particularly for low- and mid-priced houses. Stronger sales supported a moderate increase in home prices. ...  Residential mortgage lenders saw an upswing in loan applications for home purchases while home loan refinancing activity was stable. ... Builders, however, reported a lull in new home starts following the spring construction rush, but building activity was expected to pick up during the next three months.”

But other data are more complicated. Metrowide issuance of permits to build single-family homes slipped a little last month, according to the Home Builders Association of Greater Kansas City, but for the year is going gangbusters – at least compared with the modest 2011. For the first six months of the year, permits are up 36 percent.

Eastern Jackson County is keeping up only if you look at the numbers closely. Here’s the math: Platte County leads the area with a 59 percent increase from a year ago, issuing 161 permits so far. Still, its numbers aren’t huge, roughly what Lee’s Summit does on its own. Clay County, working with a larger base, is up 59 percent. Johnson, Cass and Wyandotte counties are all in the 30 to 36 percent range.

And Jackson County? Nine percent. OK, take out Kansas City and Grandview to focus on more robust Eastern Jackson County. Now it’s 8 percent. That doesn’t make sense. What gives?

Last year, Independence saw a spike in permits, and now that’s skewing this year’s figures. Blue Springs is up 28 to 33, an 18 percent gain. Lee’s Summit is up 57 percent, from 72 to 113. Grain Valley is off a little, from 21 to 18, but unincorporated parts of the county are up from nine to 19. Independence has posted a respectable 39 permits – it usually runs a little ahead of Blue Springs – but that looks lousy compared with last year’s 90. So the trend of EJC growth is clear. Take out the Independence figures, and it’s up 52 percent.

Upbeat KC Fed report
The rest of the KC Fed’s part of the Beige Book shows a regional economy that’s growing moderately with more than a few bright spots.

Here’s the most encouraging thing I’ve seen in a Beige Book in some time: “Consumer spending improved with stronger than expected sales in June and was expected to strengthen further in the coming months. ... retailers reported increased sales, particularly for seasonal items, mid-priced appliances, apparel, and fashion accessories. ... Auto sales climbed sharply and were expected to remain solid for the next few months with more dealers offering sales incentives and discounts. Fuel-efficient cars sold well, while demand for large, expensive cars and trucks remained weak. Restaurant sales increased more than expected as both the number of diners and average check amounts edged up in June.”

OK, demand for luxury goods is a little soft. Otherwise, that’s pretty solid.



Other highlights:
n Housing. Steady. See above.
n Manufacturing has grown, particularly in food processing and aircraft manufacturing, but America’s manufacturers are exporters and uncertainty over the chronic economic mess that is Europe is hanging over them by depressing worldwide demand for their goods. Capital spending is holding steady, but fewer are hiring and workers are getting fewer hours.
n Agriculture – this is a story we know. The drought is taking a toll.
“Agricultural growing conditions deteriorated substantially since (late spring) as drought spread ...” the Fed writes. Winter wheat came in OK, but corn and soybean crops are being hammered. Pastures are dried up, and ranchers are thinking about selling feeder calves early. On the other hand, world demand for pork is up, and some producers are expanding production.
How will that affect most people?
“Restaurant owners ... planned to increase menu prices due to high food costs,” the Fed said.
n “ ... new commercial construction edged up and was expected to rise further with more projects in the planning stages. Commercial real estate prices firmed with stronger sales activity, and real estate contacts noted owners were making fewer concessions to facilitate deals. Commercial real estate rents rose as vacancy rates fell further.”
n But don’t look for a raise. “Wage pressures remained subdued ...  raw materials prices edged up, and finished goods prices generally held steady. Many firms were reluctant to increase wages or hire new staff until economic uncertainty diminishes.”