After months of stellar gains pending home sales is starting to show signs of decline in some real estate markets. According to the National Association of Realtors® (NAR), the Pending Home Sales Index dropped 1.8% in June, yet is still considerably higher than during the same period last year. It is the first decline in the Pending Home Sales Index in the past ten months.
It is typical for the real estate market to start slowing down towards the end of summer as kids go back to school and families take their remaining vacation days for the year. Also, many renters who became frustrated with being outbid due to the shortage of available properties are renewing their leases instead. “Competition for existing houses on the market remained stiff last month, as low inventories in many markets reduced choices and pushed prices above some buyers’ comfort level,” said Lawrence Yun, chief economist, NAR.
But the story being played out in other real estate markets isn’t being felt in Chicago, at least not yet. In fact, real estate sales throughout Illinois continue to be strong. Based on data released by the Illinois Association of Realtors®, the median home price across the state jumped to $194,243 in June, an increase of 8.4% since June 2014. And in the nine-county Chicago Metropolitan Area, median home prices pushed its way up to $232,500, a gain of 5.7% for the same period.
More than half of Illinois counties saw year-over-year gains in the number of home sales in June 2015. For example, 180 units were sold in Rock Island County, a 26.8% increase; Will County saw a 19.3% gain at 1,220 units; and, Lake County is up 14% with 1,262 units sold. “The burst in sales growth last month was unexpected,” said Geoffrey J.D. Hewings, director, Regional Economics Applications Laboratory, University of Illinois. Also, homes are selling faster too. On average, homes across the state sold within 63 days. That’s 11 days faster than the 72-day average in May. Real estate agents who work for the best real estate companies are in a better position for helping clients find the right housing solution to meet their needs.
Meanwhile, mortgage rates have declined and are now under 4%. This is helping qualified buyers to pay a little more for a home and still be within their range of affordability. But this could change as the Fed is expected to begin increasing interest rates within the next six months. If mortgage rates begin to rise in 2016, it could put some pressure on home prices.