December marked the 18th month in a row that Chicago home sales rose over the previous year and it was the 10th month of double digit increases. The number came in 17.1% higher than last year. However, when the Illinois Association of Realtors publishes their numbers in about 2 weeks they are going to report an increase closer to 14.1%.
Why the difference? The IAR has changed data providers and with that change they have also changed their methodology slightly. The way I’m making my comparison, and it’s the way the IAR used to do it, I take a snapshot on the 7th of every month and compare it to the snapshot taken on the 7th of the month one year prior. It’s an incomplete picture because there are always a few closings that straggle into the system after the 7th of the month – anywhere from 40 – 100 units – but it’s a consistent approach. What the IAR is now doing is comparing the incomplete snapshot on the 7th of the most recent month to the final numbers from the previous year. Hence it tends to understate the true change in sales.
I spoke to the IAR about this change last month when they first introduced it. The reason for the change is that they are now relying upon this new data provider to aggregate all this data from all the different Illinois MLS organizations and it’s a lot easier to track the data this way. So, as always, I’ll do my own thing.
December Chicago Home Sales
The graph below shows monthly Chicago home sales going back to 1997 with all the Decembers flagged in red. When the final numbers come in it will have been the highest December in 6 years, including the government distorted sales in 2009. Nevertheless, that’s equivalent to what was sold in December 1998 – i.e. we have a long way to go to hit those bubble peaks.
Chicago Home Contract Activity
Home contract activity was also up a healthy amount in December but not nearly as much as recent months. The 17.5% increase was the smallest increase in 11 months. That should still be enough to fuel further increases in closings but it could be a sign that things are slowing down. Given the lag between contracts and closings and the inevitable contracts that fall apart there are currently 4737 pending home sales from the end of December. That’s about 2.6 months of closings, down from last month’s 2.9 month supply.
Chicago Home Inventory
If you are a buyer the availability of homes for sale continues to be a growing problem – or the problem is that the supply is not growing. As you can see in the graph below from the Chicago Association of Realtors (only current through the end of November) inventory continues to plunge on a months of supply basis. Of course if you are a seller this is not a problem at all but rather a blessing.
In a few days we hope to provide our own inventory update current through the end of December.
Distressed Property Sales
Nothing really new here. In December a fairly typical 39.7% of home sales were distressed – either short sales or foreclosures. That was below the last couple of years. Still no evidence of us drowning in all that shadow inventory – well, at least no more than we have been.