Home sales improved last month particularly in the entry-level and single-family markets, according to the Illinois Association of REALTORS® August housing report released today. Spurring sales activity were record low mortgage interest rates, more affordable prices and the first-time homebuyer tax credit.
Statewide, August Illinois total home sales (which include single-family and condominiums) reached 10,595 homes sold, down 3.0 percent from August 2008 sales. In the Chicagoland PMSA* sales were up 1.3 percent compared to August 2008 figures, marking the second consecutive month of year-over-year sales increases for the nine-county region.
Sales activity is a good sign for the Illinois; we are moving through inventories and this will help stabilize prices. Still, job losses and foreclosures continue and are significant factors, according to University of Illinois economist Geoff Hewings in his latest housing market forecast.
Hewings says the increase in sales of low and moderately priced homes in part can be traced to declines in the numbers of foreclosed properties entering the market.
“However, with the expectation that unemployment rates are expected to increase until mid-2010 there is concern about the possibility of another wave of foreclosures hitting the market. Once again this month, while sales have exhibited a rebound, there has been no rebound in prices—a phenomenon observed nationally and not just confined to Illinois and Chicago. The concern here centers on the relationship between prices and foreclosures; there is increasing evidence that the most important factor in foreclosures is the degree to which the homeowner has negative equity in the home,” said Hewings in the report.
Absent an uptick in home sales, it is unlikely that prices will recover much before the middle of 2010. Here are several economic observations from the forecast, which you can find at www.illinoisrealtor.org, click on Market Stats:
- The state’s employment levels are now over 411,000 below the prior peak in November 2000; four sectors—construction, manufacturing, information and financial activities—now have employment levels below values in 1990.
- With mortgage rates still low, a modest recovery in the housing market might be anticipated were it not for the expectation of continued increases in the number of unemployed.
- Since the beginning of the recession in December 2007, Illinois has posted negative job changes 20 times. Illinois’ official unemployment rate in June was 10.0%.
*The Chicagoland PMSA includes Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will.