This monthly Chicago real estate market update is overdue by about a week. In addition, I did not take my snapshot of the data until September 10 – 3 days late. Consequently, I’m about to slightly overstate August’s performance, since additional sales were reported in that 3 day time period. Nevertheless, I’m able to provide this update one week ahead of the Illinois Association of Realtors.
As I predicted in last month’s update on the Chicago real estate market we are seeing a pretty significant slowdown in closings. August showed the second largest decline in home sales in a bit more than 3 years – down 13.3% from last year. The IAR will report sales down around 14.9% since they compare the preliminary August numbers to last year’s final numbers. Nevertheless, a variety of other statistics still point to a fairly strong housing market.
The historic graph below, with all the August’s flagged in red and a light blue moving average, shows that last month was still the second highest August in the last 7 years. However, looking back over the last 18 years last month would only rank 9th in sales volume – somewhere between 2000 and 2001 levels.
Chicago Home Contract Activity
And we already know from a number of other indicators that sales volume isn’t likely to look much better any time soon. For instance, contract activity, which represents future closings and is shown below, continues to trend down. I estimate that August contracts written will be down 15.6% when the dust settles. The level is pretty close to that hit in 2009, which was actually a pretty weak year.
Pending Home Sales
Pending home sales is another way of looking at future homes sales and that is also pointing to further weakness in closings. On a months of supply basis it hit another record low since I’ve been tracking it – 1.7 months. Basically there just isn’t that much waiting on the sidelines to close and some of August’s closings, in the face of weak contract activity, came at the expense of drawing down this backlog.
Distressed Home Sales
Once again it looks like the decline in sales can pretty much be fully attributed to a decline in distressed home sales, which is why I’m not all that concerned about the overall decline in sales. On a percentage basis Chicago hit a new low of only 17.2%. Compare that to a high back in August 2010 of 40.6%. We’ve come a long way.
Chicago Home Inventory
But one of the reasons I remain confident in the strength of the current market is that inventory levels remain exceptionally low. For both condos/ townhomes and single family homes inventories have risen slightly over the last few months but they remain at near record lows for the last 6+ years. Currently there is a 4.2 month supply of condos and townhomes and a 5.1 month supply of single family homes. It’s still a sellers’ market for the most part.
Chicago Home Sale Market Times
The other indicator pointing to a sellers’ market is market time. Condos and townhomes that sell are doing so in only 68 days while single family homes sell in 85 days. Those numbers are only slightly higher than the recent lows.
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