The number of homes for sale is still extremely low, says one expert, keeping prices up. Inventory, says another, is nowhere close to meeting consumer demand. And while mortgage rates, technically, are down, it is just a blip.
3-Jun-18 There still may be time for prospective home and condominium buyers to lock in a mortgage with an affordable interest rate of less than five percent this spring.
A week after benchmark 30-year mortgages climbed to 4.66 percent the highest level in more than seven years rates declined on May 31 for the first time in four weeks, reported Freddie Macs Primary Mortgage Market Survey.
While average 30-year fixed-rate mortgages nationwide fell ten basis points to 4.56 percent at the end of May, experts say the decline likely is a temporary pause before rates continue to move higher. A year ago at this time, 30-year fixed loans averaged 3.94 percent.
In Chicago, 30-year loans are available at rates ranging from 4.376 to 4.61 percent, according to RateSeeker.com.
||Mortgage rates so far in 2018 have had the most sustained increase to start the year in more than 40 years, said Sam Khater (left), Freddie Macs chief economist. Through May, rates have risen in 15 out of the first 21 weeks, which is the highest share since Freddie Mac began tracking this data for a full year in 1972.
Khater said the rate decline last week was driven by recent trade and geopolitical issues, which led to a sudden decrease in long-term Treasury yields.
Confident American consumers shrugged off the market volatility. Purchase mortgage applications continue to trend higher from a year ago, he said.
Khater predicted that housing demand overall should stay strong if job growth and the overall economy keep running at healthy levels. The Labor Department reported that strong hiring in May drove the nations unemployment rate down to 3.8 percent, tantalizingly close to the level last seen in 1969.
Extremely low housing inventory conditions in most markets are preventing sales from breaking out, while also keeping price growth elevated, said Khater. Even if rates climb closer to five percent, sales have room to grow more, but only if current supply levels start increasing more meaningfully.
Home prices creep up in Chicago
Meanwhile, Illinois Realtors reported relatively flat existing home and condo sales in Chicago during April. Year-over-year home and condo sales increased only 0.1 percent with 2,649 transactions in April, compared with 2,647 deals a year ago.
However, the median price of homes and condos in Chicago rose to $309,950, up 4.2 percent from $297,500 in April 2017. The median is a typical market price where half the homes sold for more and half sold for less.
In the nine-county Chicago Metro Area, sales of single-family and condos totaled 10,535 units in April, up 2.1 percent from 10,315 units in April 2017. The metro area median price in April was $250,000, an increase of 3.3 percent from $242,000 in April a year ago.
Statewide, 14,478 homes and condos were sold in April, up 1.9 percent from 14,202 in April 2017. The statewide median price in April was $210,000, up five percent from $200,000 in April a year ago.
Sales and price information are generated by Multiple Listing Service closed sales reported by 27 participating Illinois Realtor local boards and associations, including data gathered by Midwest Real Estate Data LLC.
|April traditionally marks the beginning of the spring selling season, and this year we saw sellers reap the benefit of tight housing inventories in many areas of the state, said Matt Difanis (right), president of Illinois Realtors. Although we saw many more properties on the market in April, the surge is nowhere close to meeting consumer demand.
The time it took to sell a home statewide in April averaged 54 days, down from 61 days a year ago. Available housing inventory totaled 51,527 homes and condos for sale, a 10.4 percent decline from April 2017 when there were 57,537 units on the market.
While the effect of rising mortgage interest rates has yet to be felt, consumer sentiment remains strong, according to University of Illinois economist Geoffrey J.D. Hewings.
For Illinois, job growth remains way behind the national rates and this sluggishness is reflected in the more muted growth of housing sales and prices, said Hewings (left).
|Overall closed sales in April closely mirror last years numbers, but the median sales price continues to rise, noted Rebecca Thomson (right), president of Chicago Association of Realtors. Buyers need to act quickly with fewer homes to choose from and shorter market times.