Home sales in the Chicago area were down -5.6% annually compared to a 1.9% drop nationally. The number of homes available to buy in May was 12,770 slightly less than last year. The inventory of homes for sale is still declining, but the rate of decline is slower than in previous years. Looking back at May of 2023 the inventory of homes was down -31.3% but in May of this year the figure was -7.7% less.
The real estate market is balancing, with inventories inching up and sales price increases moderating. Under the pressure of growing prices and interest rates, the pace of the real estate market is slowing down but certainly not crashing. This is healthy for both buyers and sellers!
Nationally, the median existing-home price grew 5.7% to $407,600 compared to the Chicago market where the median price grew 9.1% to $350,000. Chicago grew more slowly than many other markets and so is not as vulnerable to price decreases. Real estate markets in Seattle, Las Vegas, and San Jose have seen falling prices this spring. But that is after massive price rises in recent years.
Nationally there are signs that the real estate market is moderating. According to the National Association of Realtors, the total housing inventory at the end of April was 1.21 million units, up 9% from March and up 16.3% from one year ago (1.04 million). Unsold homes sit at a 3.5-month supply at the current sales pace, up from 3.2 months in March and 3.0 months in April 2023. For homes priced $1 million or more, inventory increased by 34% and sales by 40% from a year ago.
Mortgage interest rates went up to 7.03% from 6.94%, according to Freddie Mac. The 52-week average mortgage rate is 7%. The Federal Reserve Open Market Committee (FOMC) may lower interest rates in September as inflation dipped to 3.3% (3.5% in the Chicago PMSA) in May.
The US economy remains strong. The Wall Street Journal points out that the S&P 500 is up 5.2% over 2023. Corporate profits are booming as analysts expect second-quarter earnings per share to gain 9.8%. Strong U.S. profit performance points toward continued economic expansion. The Atlanta Fed estimates the US economy grew by 1.8% in Q1. Wages are still increasing faster than inflation with average hourly earnings rising 0.4% monthly and 4.1% from a year ago. (BLS)
Nonfarm payrolls expanded by an unexpected 272,000 jobs in May. Unemployment is unchanged at 4% nationally and 4.3% in the Chicago PMSA. Despite some high-profile layoff announcements from Tesla and Amazon, the Labor Department reported that the total number of workers laid off from their jobs in March came to a seasonally adjusted 1.526 million. That was the fewest since December 2022. In prepandemic 2019 (a good year for the job market) the monthly layoff count averaged 1.818 million. (WSJ)