August was a good news/ bad news month for the Chicago real estate market. The good news was that home sales were up 8.9% over last year. The bad news is that last August was pretty weak so it was an easy comparison and this August did not surpass 2013. In fact, August closings came in 6.0% below the 2013 level. However, August sales were higher than 6 of the last 7 years and it was the 7th month in a row of higher sales.
It’s all graphed below, with all August numbers flagged in red and a blue 12 month moving average line that has recently ticked up with the increases over last year.
When the Illinois Association of Realtors releases their update in about 2 weeks they will report sales up only 6.3% based upon their slightly flawed methodology.
Chicago Home Contract Activity
The leading indicator of home sales is the contract activity and the growth in that measure has been slowing down lately, foreshadowing a slowdown in closings. For instance, my estimate for August is that home purchase contracts were only up by 1.9% over last year.
Pending Home Sales
Pending home sales, which I measure on a months of supply basis, was basically flat to last year. So contract activity just replenished the closings that came from this pool. At the end of August we were sitting on a 1.66 month supply, which is basically flat to last year.
With the exception of August, you can see that there has been a long term decline in this metric, possibly because deals are closing quicker with fewer short sales in the mix.
Distressed Home Sales
Distressed home sales continue to decline in both absolute terms and as a percentage of total sales. This was a record low August with only 15.0% distressed sales – a tad under 400 units. However, with almost 15,000 Chicago homes in foreclosure there are plenty more where those came from and if they ever decide to really clear the backlog we could see this climb back up. In the meantime I do suspect that this decline is about to flatten out.
Chicago Home Inventory
The home inventory numbers just continue to shock, hitting new lows every month. We are now down to only a 3.7 month supply of condos and townhomes from 4.6 months last year and only a 4.6 month supply of detached homes, down from 5.9 months last year. It’s a little hard to see this dramatic decline in the graph below because it is obscured by the seasonality pattern.
It has not been this hard to find a home in the last 7 years.
Chicago Home Sale Market Times
With inventory levels so low it should not be a surprise that market times also remain low – on par with last year at this time. Condos and townhomes took 64 days to sell on average, down slightly from 68 days last year and detached homes took 87 days, up slightly from 85 days last year. Of course we are now moving into the time of year when market times increase.
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider’s view of the seamy underbelly of the real estate industry, or you just think he’s the next Kurt Vonnegut you can Subscribe to Getting Real by Email. Please be sure to verify your email address when you receive the verification notice.