After 7 straight months of year over year declines in home sales the Chicago real estate market finally ticked up in February with a 6.0% increase over last year. Out of the last 19 years only 6 of the biggest bubble years hit a higher sales figure. Not too bad all in all.
Now you will hear about the Illinois Association of Realtors sales release in about 2 weeks and they will report about a 3.6% increase in home sales due to an inconsistency in the way they calculate their comparison.
Keep in mind that we turned in this increase in sales despite a loss of 100 distressed sales from the previous year. If we just look at non-distressed sales they were up around 23.8%. As the year progresses the impact of the lost distressed sales is going to become smaller and smaller (unless distressed sales continue to decline) so we should start to see bigger increases in the total sales numbers.
Chicago Home Contract Activity
The increase in sales is being driven by higher contract activity. As you can see in the graph below the moving average just started to tick up a bit. I’m estimating that February was 4.9% higher than last year and this is the third month in a row that contract activity was up.
Pending Home Sales
The net effect of higher contract activity and higher closings was an increase in the pending home sales numbers – both in absolute terms and on a months of supply basis. In the graph below you can see how it’s hitting the seasonal peak, but at a slightly lower level than last year – 3.0 months vs. 3.1 months last year. So there are enough transactions in the pipeline to feed the title companies for 3 months at the current close rate.
Distressed Home Sales
As I’ve already mentioned distressed home sales as a percentage of the total sales and in absolute terms is still on the decline. Another record low of 29.9% was hit in February. That’s roughly half the peak level that was hit in 2012.
Chicago Home Inventory
Just when you thought it couldn’t go any lower Chicago home inventory levels hit new record lows for this time of the year. Single family homes were at a 4 month supply at the end of February and condos and townhomes were at a 3.3 month supply – both exceptionally low levels and constituting a “seller’s market”. But it’s only a seller’s market if you are priced reasonably.
Chicago Home Sale Market Times
This is the time of year when market times increase since it’s a seasonally slow time. However, market times actually increased more than you would expect and ended up higher than last year at this time, which is a bit surprising, given how low inventories are. Single family homes that sold did so in 113 days while condos and townhomes sold in 104 days.
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