A sliver of good news in housing numbers

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Updated: January 13, 2012 10:41AM

Housing’s third quarter numbers are in, and there’s a glimmer of good news to savor. Both national and state analytical reports show improvement in some key categories.

An early November report from the National Association of Realtors (NAR) noted that sales rose in every state from third quarter 2010. Moreover, 45 of those states posted double-digit gains, including Illinois at 19.8 percent.

Still, while sales were up, prices remained soft in many metro areas. For example, the median existing single-family home price rose in 39 of 150 areas from one year ago, but the rest showed declines. Chicagoland’s median price was down 6.2 percent. (The median is where half sold for more and half sold for less, providing a broad market snapshot only. It is not a pricing indicator for a specific home.)

“Home sales need to recover first. Only then can prices stabilize,” said Lawrence Yun, NAR chief economist. “The good news is that inventory levels have been trending gradually downward.”

Nationally, existing-home sales were 17 percent higher from third quarter 2010, for a total of 4.88 million homes sold. In the Midwest, existing-home sales were 25.1 percent higher than a year ago, with only a 2.2 percent year-to-year median price decline overall.

Another positive is the NAR’s Housing Affordability Index, which marks 2011 as one of the most affordable times to buy since the Index was instituted in 1970.

According to NAR President Ron Phipps, “Housing affordability conditions have been at a record high this year …. For people with secure jobs, good credit and long-term plans, today’s conditions will be remembered as a golden opportunity to enter the housing market.”

Economists at the University of Illinois Regional Economics Applications Laboratory (REAL) released their third quarter 2011 housing industry report, combined with forecasts for the fourth quarter. Positive trends noted for Chicagoland include:

• Sales volume in 4Q11 is forecasted to be 30-64 percent higher than 4Q10.

• The overall 3Q11 supply is 3.3 quarters worth of inventory, down from 4.7 quarters last year.

• Homes priced under $100,000 are in high demand, with supply there down to just 2.4 quarters.

Similar to the national outlook, the Illinois economists forecast median prices in the Chicago metro area, and the state, will be lower in 4Q11 than 4Q10.

“While median prices continue to trend downwards throughout Illinois, there is some indication of increased demand as inventory levels in certain price ranges have been shrinking,” said Dr. Geoffrey J.D. Hewings, REAL’s director. “In the third quarter, 64.1 percent of the homes were sold in the price range under $200,000.”

A shrinking inventory helps. But, both national and state economists see job growth as the all-important ingredient for a sustainable housing recovery.

Concluded Hewings, “If we had six or nine months of robust growth, something in the order of 150,000 to 250,000 jobs nationally, then we would see some real uptick in the housing market.”

Julie Morse is a licensed Realtor.