Chicago Home Sales Continue Climb

September 22, 2013

Chicago home salesSales of existing single-family homes and condominiums in the Chicago real estate market continued to handily beat their year-ago comparisons in August, but median prices fell for the second consecutive month since peaking in June.

Still, homes continued to go under contract quickly last month.

Of even better news to sellers and buyers are expectations that mortgage interest rates will continue to moderate, following the Federal Reserve Board’s meeting this week.

In the nine-county Chicago area, 11,771 homes were sold in August, a 24.3 percent gain from a year ago, at a median price of $197,500, the Illinois Association of Realtors reported Thursday. While that price was up 16.2 percent, from August 2012’s $170,000, it was down from the $200,000 recorded in July and $205,000 in June.

Within the city of Chicago, home sales rose 22 percent from a year ago, to 2,797 properties sold at a median price of $245,000. That compared with median prices of $250,000 the previous month and $200,000 in August 2012.

Sales of condos within the city rose 23.1 percent from a year ago, to 1,775 units sold at a median price of $282,250, up 17.6 percent.

The decline in median prices, while a potential worry for home sellers, is in keeping with the local market’s pattern over the past five years. Historically, local prices have peaked in June or July  before trending downward the second half of the year.

The sales momentum should continue into the year’s final three months, according to Geoffrey J.D. Hewings, who directs University of Illinois’ regional economics applications laboratory.

“The price mix of homes sold is moving back to pre-recession levels as price increases move more homes into higher categories and as home buyers begin to seek more expensive properties,” he said. “The sluggish economic recovery and increasing mortgage interest rates have not yet dampened housing demand.”

Also on Thursday, Freddie Mac reported that the average interest rate on a 30-year, fixed-rate mortgage was 4.5 percent this week, compared with 4.57 percent the last two weeks. A year ago, the average rate on that mortgage product was 3.49 percent.

The average rate on a 15-year, fixed-rate loan was 3.54 percent this week, down from 3.59 percent last week. It averaged 2.77 percent a year ago.

Average interest rates largely have trended upward since early May, curtailing mortgage refinancing activity and job loss for thousands of loan originators around the country. It also caused concern about shrinking home affordability, particularly among first-time buyers.

The Federal Reserve Board’s announcement Wednesday that it planned to continue supporting the financial markets, rather than reduce its purchases of Treasury and mortgage securities may ease some of those worries. “The Fed has provided borrowers with another window of opportunity to refinance their mortgage or lock in a home purchase at relatively low rates,” said Fannie Mae chief economist Doug Duncan.

Marketing time fell by almost a third in some counties. In Cook County, for instance, it took an average of 54 days for a home to go under contract in August, compared with 80 days a year ago. In Lake County, market time was 63 days, compared with 86 days last year. It took an average of 47 days in Chicago.

This article was originally published in the Chicago Tribune on September 19, 2013.

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