The recession has affected the Great Plains States, with nonagricultural employment falling 0.6 percent, a loss of nearly 6.5 million jobs, between December 2000 and December 2001. Missouri recorded job losses for the year while employment grew in Kansas and remained relatively unchanged in Iowa and Nebraska. The majority of new jobs were added in the construction sector, with a 3.4-percent increase, or 10,500 new employees. Manufacturing employment continued to decline in 2001, down 4 percent from 2000 levels with a loss of nearly 25,000 manufacturing jobs in Missouri over the past year. The unemployment rate in the region rose to 4 percent as of December 2001.

Despite the slower economy, demand for sales housing remained healthy in 2001. Single-family permit activity in the region increased 4.7 percent to a total of 43,000 homes. In the Kansas City area, activity rose 5 percent to 9,759 homes. Sales of existing homes in the Great Plains have increased approximately 5 percent in each of the last 5 years, to a total of 277,700 homes in 2001. During the past year, the Des Moines, Iowa, and Springfield, Missouri, areas recorded significant increases of 13 and 8 percent, respectively, according to local sales data. Existing home sales in the Kansas City area totaled 54,700 homes, an 8-percent gain. The increased activity, according to local sources, resulted from first-time and move-up buyers taking advantage of low interest rates and affordable prices. The median sales price of existing homes in the region increased approximately 6 percent between 2000 and 2001. Kansas City recorded an increase of 7 percent to $135,700; in the very active Des Moines market, the median price increased 8 percent to $125,300; and in Springfield, the existing sales price rose 7 percent to $92,300.

Multifamily permit activity declined in the region by 6 percent to 14,700 units in 2001. Only the Des Moines and Kansas City metropolitan areas recorded increases. In the Des Moines area, permits were issued for approximately 1,000 multifamily units. Market conditions during the year have been balanced to tight, with a rental vacancy rate of 5 percent. However, local sources expect market conditions to become more balanced and competitive as these new units enter the market. In the Kansas City area, permits were issued for more than 5,200 new units as demand for new units remains healthy. In Wichita, Kansas, the rental market is somewhat soft with an overall vacancy rate of 8 percent. The weaker rental market is due to the impact of declines in the area's aircraft industry on the local economy. During the past 2 years, multifamily activity in the Wichita area has averaged less than 120 units annually.

Spotlight on St. Louis, Missouri-Illinois

Nonagricultural employment declined 1.6 percent in the St. Louis metropolitan area during the 12 months ending December 2001. Except for construction, which posted a 3.9-percent increase, employment declined in all other sectors. Declines in the manufacturing, transportation and utilities, and wholesale and retail trade sectors stand out with decreases of 3.5 percent, 3.3 percent, and 2.5 percent, respectively, during the period. The unemployment rate increased from 3.6 percent in December 2000 to 4.5 percent in December 2001.

The transportation sector has been particularly hard hit, with losses of 3,000 jobs, or 15 percent of the total job loss in the area. Those losses are attributable primarily to a decline in air travel and to the restructuring of American Airlines since the company's acquisition of TWA, formerly based in the area. Almost all of this loss occurred in the final 6 months of 2001. St. Louis had been TWA's main hub and will continue to play a major role for American Airlines, according to company spokesmen. However, additional job losses could be expected if more flights are redirected to the airline's other hubs.

The housing market appears to have been affected only slightly by recent economic conditions. Single-family building permit activity remained strong, increasing 5 percent to 9,940 units for the year. Multifamily permit activity totaled 2,011 units, approximately equal to the annual average for the past 5 years. According to local sources, residential development in high-growth St. Louis and St. Charles Counties is being affected by a decreasing supply of available land that is not located in the Missouri and Mississippi Rivers' floodplains.

Sales of existing homes held steady in 2001, as approximately 26,300 existing homes, only 100 more than in 2000, were sold. Approximately 14 percent of existing home sales in the St. Louis metropolitan area used FHA-insured financing. The median sales price in 2001 in the metropolitan area was $113,400, an increase of 4.8 percent. Prices in St. Louis and St. Charles Counties increased 8 percent, to $129,500 and $139,000, respectively.

The rental market in the metropolitan area is balanced, with an overall vacancy rate of 7 percent. Conditions in some of the city's submarkets are tighter, particularly in the Tower Grove neighborhoods and in the Central-West End near Barnes Hospital and Forest Park. Many developments in these areas report occupancy rates of 95 percent or more. Another strong rental market is the Soulard area south of the central business district, in part because of a 10-minute commute to downtown St. Louis.

The Soulard neighborhood also is experiencing a significant amount of sales activity, mainly from young professionals who are buying and renovating homes. Prices in the neighborhood range from $40,000 for a shell in need of rehabilitation to $300,000 for a fully restored single-family unit.

New single-family homes and multifamily rental units are being developed in the St. Vincent neighborhood of the city's Gate District. Prices for a new single-family home in this neighborhood start at $160,000. Finally, the city's north side and East St. Louis are experiencing some revitalization because of recently constructed rental housing developments targeted at mixed-income households.