Local Housing Sector Shows Real Strength in November

According to data released today by the Kansas City Regional Association of Realtors (KCRAR) there were 2,454 home sales in the area this past November. This is sharp increase from November 2008 when only 1,518 homes sold. As Chart 1 shows below, home sales have remained steady after peaking in the summer months. In a typical year, home sales will dip in fall and winter as shown in chart 2. This dip is largely absent in 2009. It appears that incentives such as the first-time homebuyers program and low mortgage rates have buoyed home sales, even during what have traditionally been slow months.

CHART 1

CHART 2

The news is good not only in terms of homes sold, but also in rising prices. The average sale price was significantly higher last month, at $160,621 compared to $155,195 in November 2008. The figures are even more impressive for existing homes, where the average sale price jumped by nearly $12,000 from one year ago ($136,000 to $148,000).
All told, this is the best home sales news we have received in three years. Home sales are up (although they have a long way to go to get back to numbers we saw prior to the recession), sale prices are up, and inventory is down, as is the length of time it takes to sell a home.
Many economists, including ourselves, believe that a resurgent housing market is key to any economic recovery. If these November numbers truly signify a housing market on the rebound, then we can begin to feel more optimistic about the economy as a whole. It is possible that the federal homebuying programs are simply shifting future sales to the present. If so, while this relieves some of the current pent-up demand, sales next spring might not pick up as much as usual. Time will tell.

Kansas City’s Unemployment Rate Sees Significant Drop in October

The Kansas City area’s unemployment rate fell one half of a percentage point between October and September (8.9 percent to 8.4 percent). This is the first decline in unemployment since April. This is certainly good news as we look to put this recession behind us, but the story behind the numbers is not all that rosy.
The unemployment rate declined because the labor force declined significantly (by 6,146) while employment declined only slightly (414). This means while the number of jobs available is stable, the number of people looking for work has declined. We would prefer to see the unemployment rate decline because the number of available jobs has increased more than the increase in labor force, but considering where we have been, a lower unemployment rate and an apparent end to the huge job loss numbers — for whatever reason — is at least something to feel positive about.

PDF Version of the Map

Metro unemployment rates held a familiar pattern in October. The highest unemployment rates continued to be in the Southeast, Great Lakes region and in California and Oregon with the upper Midwest having the lowest unemployment rates in the country.

PDF Version of the Map

The decline in unemployment rate that Kansas City experienced in October was not unique. Many metros across the country saw declines, especially in the New England states, upper Midwest and Michigan, where the recession has been particularly hard. The unemployment rate still increased between September and October in South Carolina, Ohio, Indiana, Illinois and many of the smaller metros in California.


PDF Version of the Map

Compared to last year, all metros saw an increase in unemployment rates. Kansas City’s rate jumped from 6.0 percent in 2008 to the current 8.4 percent. This increase places Kansas City right in the middle in terms of unemployment rate change. The greatest increases in employment rates were seen in parts of the south, the Great Lakes area and the Pacific coast states. The Midwest and Northeastern states had smaller increases.