Home Sales

Home sales nationwide grew in February, according to the National Association of Realtors®, but home prices continue to decline in most areas of the country. Industry experts see this as an indication that it might take several more years for the real estate sector to recover fully.

The Pending Home Sales Index, a forward-looking indicator, rose 2.1 percent to 90.8, based on contracts signed in February, from 88.9 in January. The index is 8.2 percent below 98.9 recorded in February 2010. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

“Month-to-month movements can be instructive, but in this uneven recovery it’s important to look at the longer term performance,” said Lawrence Yun, NAR chief economist, who stressed the importance of looking at the broader trend. “Pending home sales have trended up very nicely since bottoming out last June, even with periodic monthly declines. Contract activity is now 20 percent above the low point immediately following expiration of the home buyer tax credit.”

According to Illinois Association of Realtors® data, statewide home sales, including single-family homes and condos, in February 2011 totaled 5,575 homes sold, up 1.3 percent from 5,505 sales in January 2011—and down 10.0 percent from February 2010. The median price in Illinois in February was $128,800, down 4.6 percent from $135,000 for the same month last year. The statewide single-family median price reached $129,000, up 1.6 percent from $127,000 in February 2010 and up 2.8 percent from $125,500 in February 2009.

While home sales are showing signs of recovery, data released March 29 by Standard & Poor’s, tracking home prices through January 2011, shows that home prices continue to drop in most areas of the country. The only metro areas in the United States that showed improvement in prices since last January were San Diego and Washington, D.C. San Diego’s figures rose just 0.1 percent over price averages seen in January 2010, but average prices rose more than 3.6 percent in Washington D.C.

Industry observers point to the unemployment rate, which remains about 10 percent nationally, as one reason for the reluctance of people to buy condos and other real estate, despite the low prices. In cities such as Washington, D.C., where the government accounts for many jobs, home sales have not been affected by unemployment as much as other areas.