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Drops in December sales of existing houses across the St. Louis area punctuated a year of double-digit declines in much of the region for 2008.

In St. Louis County, which accounts for 40 percent of the region’s housing market, sales dropped 14 percent from 2007 to 2008, according to figures released Monday. Other released figures revealed large declines in the number of residential building permits issued last year, indicating that the region’s housing slump will continue.

In St. Louis County, for example, the median house price dropped to $123,000 in 2008, a 17 percent drop from the previous year. The nationwide median sales price dropped to $175,400, down 15 percent from a year earlier.

Despite a drastic slowdown in residential construction in the St. Louis area and mortgage rates hovering near 5 percent, the backlog of unsold existing houses remains abnormally high. Recent sales, however, in the city of St. Louis and parts of the metro area are reducing that inventory.

Nationwide, figures show that offsetting factors drove a boost in housing sales last month. Foreclosures in the West helped increase house sales 14 percent there. Sales also were higher in other regions — including 4 percent in the Midwest — as average and median prices of single-family houses fell 15 percent last month compared with December 2007.

On Monday, a leading forecaster said sales of existing houses are unlikely to rebound until the middle of this year even if financial markets thaw.

Patrick Newport, an economist with IHS Global Insight in Lexington, Mass., said that despite December’s sales rebound, sales are trending down except in the West, where foreclosures are common.

Foreclosures are affecting the St. Louis market, too, said Shawn Kelsey of Kelsey Group Realtors in Chesterfield. Low mortgage rates and lenders backing credit-worthy buyers should help sales. "The one thing that can stop it all is (a lack of) consumer confidence," Kelsey said pay day loans.

Bargains can be had, Kelsey added, citing the example of a Ballwin house purchased a year ago for $155,000. The buyer completed 80 percent of an extensive renovation but was unable to continue. A bank took the house back for $172,000. Kelsey said his company is buying the foreclosed home for $125,000 and after investing a few thousand dollars worth of work will return it to the market.

"We’re not afraid of buying houses," he said. "We know homes will sell."

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Plummeting numbers of house construction permits indicate a continued weakness in the area’s housing market. Permits in Jefferson County for single-family and multifamily houses fell 87 percent last year — from 1,085 to 143, according to the Home Builders Association of St. Louis. In St. Louis County, 557 permits were issued last year, a 46 percent decline from 2007.

Global Insight forecasts house sales will drop further and hit bottom by the middle of this year, if financial markets rebound. Lawrence Yun, the group’s chief economist, urged legislators to include tax credits for house buyers. Carole Baras, a real estate agent in south St. Louis County and president of the St. Louis Association of Realtors, said the market began showing some resurgence this month.

"Our market is not as bleak, maybe."

The Associated Press contributed to this report.

tbryant@post-dispatch.com | 314-340-8206

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