Some of the most affordable home-loan interest rates in months couldn’t lure Chicago house hunters off the beach in late summer, analysts say.
Illinois Realtors reported that Chicago home sales declined 4.5% to 2,716 units in August from 2,844 units in August of 2016. The median price of a home in the city of Chicago rose 5.2% to $285,000 in August compared with $271,000 in August of 2016.
Some 11,660 single-family homes and condominiums were sold in the nine-county Chicago area in August 2017, down 3.9% from 12,139 units in August of 2016. The median price in August 2017 was $239,900 in the Chicago area, an increase of 4.3% from $230,000 in August of 2016.
“The summer selling season was marked by high demand and lower-than-ideal inventories,” said Doug Carpenter, president of Illinois Realtors. “The data show homes are selling at a lightning-fast pace, which speaks to how quickly consumers are prepared to move to get the home they want.”
The time it took to sell a home in August averaged only 48 days, down from 55 days in the same month a year ago. Available statewide housing inventory totaled 60,462 units for sale, an 11.4% decline from August of 2016 when there were 68,240 units on the market.
Statewide home sales (including single-family homes and condominiums) in August 2017 totaled 16,196 units sold, down 3.4 percent from 16,771 units in August of 2016.
The statewide median price in August was $200,456, up 5 percent from August of 2016, when the median price was $191,000. (The median is a typical market price where half the homes sold for more and half sold for less.)
Sales and price information are generated by Multiple Listing Service closed sales reported by Illinois Realtors, including Midwest Real Estate Data LLC data.
“With the improvement in the economy, people decided to enjoy their summer and the disposable income in their pockets,” said Matt Silver, president of the Chicago Association of Realtors (CAR).
“While this contributed to a slight slowdown in year-over-year sales, the market is on track and poised for a strong autumn,” Silver said. “Days on market continue to decline, and our year-to-date sales are higher than last year’s.”
University of Illinois economist Geoffrey J.D. Hewings observed: “The uncertainty in the Illinois economy over the last two years has contributed to a dampening of housing demand in contrast to the generally positive outlook in the rest of the country. At the same time, declines in inventory are still exerting upward pressure on housing prices and thus reducing affordability.”
Despite the summer home sales doldrums, the recent period of generally declining interest rates may be over, experts said.
Freddie Mac’s Primary Mortgage Market Survey reported on September 7th that the average interest rate on benchmark 30-year fixed home loans inched upwards to 3.83% from 3.78% a week earlier. It was the first increase in 30-year fixed mortgage rates in seven weeks. A year ago at this time, the benchmark 30-year rate averaged 3.48%.
Fifteen-year fixed rate loans averaged 3.13 percent, up from 3.08% a week earlier. A year ago at this time, 15-year fixed mortgages averaged 2.76%.
“The 10-year Treasury yield continued its upward trend, rising 7 basis points last week,” noted Sean Becketti, chief economist, Freddie Mac. “As we expected, the 30-year mortgage rate followed suit, increasing 5 basis points to 3.83%. This week's uptick in the 30-year mortgage rate ends a nearly two-month streak of declines.”
Although the Federal Reserve Board (Fed) has raised short-term interest rates four times since the financial crisis took rates to zero, its investment balance sheet has held steady at $4.5 billion.
In an effort to normalize monetary policy following nearly a decade of easing, analysts say the Fed now plans to start reducing the size of its holdings. To move toward normalization, the Fed plans to allow $6 billion of Treasury securities and $4 billion in mortgage-backed securities roll off the balance sheet per month. This normalization is expected to place upward pressure of longer-term interest rates, including home mortgages, experts predict.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.