Sales of homes in the Chicago area dropped in April as potential homebuyers looked at houses but then turned away after finding disappointing choices, the Illinois Realtors reported Wednesday.
Sales were down 2.3 percent compared with a year ago, but prices rose 5.2 percent as sellers raised prices amid a limited supply of homes for sale. There were 10,157 homes sold.
"Buyers are interested, but are holding back because they just aren't finding what they want," said Doug Carpenter, president of Illinois Realtors. "Sellers seem to be waiting for prices to keep moving up."
Chicago homeowners put 4,845 homes on the market in April, down from 5,103 during the same period a year earlier. In April 2008, there were 7,102 newly listed homes.
Declining employment also may be a factor. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois, said that employment growth is typically a key driver of home sales as people arrive in an area to take jobs.
But new companies are reluctant to come into the state or add jobs because executives "are afraid they will wake up to a large tax increase," Hewings said.
"The state going two years without a budget, the personal feud between the governor and legislature is costing us," he said.
Hewings said he will need to watch home prices and job declines over time before being certain, but if the recent numbers continue, the decline in jobs "may have a strong dampening effect on housing."
While Illinois had a low unemployment rate of 4.7 percent in April, it remained above the national rate of 4.4 percent.
Hewings noted that the unemployment rate fails to show the extent of job weakness in Illinois because it reflects the number of people looking for work rather than those who have given up. About 7,200 jobs were lost last month in Illinois and 7,700 in March, according to the Illinois Department of Employment Security.
Although the median price has recovered from the housing crash, many areas remain below their peaks and homeowners considering selling continue to wait for prices to recover enough for them to break even.
While overall sale prices in the Chicago metropolitan area rose 5.2 percent in April over a year ago, the median price of a single-family homes in particular climbed 8.3 percent to $260,000. Condo prices rose 1.7 percent to $206,500 in the metro area.
The median price in April 2008 was $192,000, but if adjusted for inflation to today's dollars, it would have been $220,387, Hewings said.
In Chicago, the sharp price gains that came early this year eased. Yet single-family home prices still climbed 4.4 percent to $235,000 and condos were up 2.8 percent to $330,000.
Sales dropped more sharply in Chicago — 4.4 percent — than the metro area generally. In Cook County, the decline has been more modest. Sales fell just 1.4 percent countywide and the median sale price was up 5.5 percent. Condo prices climbed less than 1 percent to a median $250,000, but single-family homes jumped 9.4 percent to $256,000.
The inventory of homes on the market in the metro area is 19.4 percent below a year ago, and even then real estate agents were complaining that the limited supply was holding buyers back. With supply limited, homes are sold quickly if priced correctly for the market, real estate agents say. In the metro area the average home was sold within 51 days and in Chicago 44 days. That's fewer days than a year ago, and far below the usual six months.
Beyond inventory levels, sales may also have been held back by declines in employment over the past two months, Hewings said.
Nationally, Goldman Sachs economist Spencer Hill said in a note to clients Tuesday that an 11.4 percent drop in new home sales in April may reflect the impact of higher mortgage rates over the last six months.
Looking at sales of existing homes in April, DuPage County had one of the largest sales declines in the Chicago metro area — down 5.4 percent as the median price climbed 4 percent. The median single-family home was $335,000. In Lake County, sales dropped 1.4 percent with the median single-family home up 9.4 percent to $273,000.
The sharpest price increases were in McHenry County, with the median price up 10.3 percent and single-family homes at $225,000; Will County, with a 12.2 percent jump in price and the median single-family home at $238,000; and Grundy County, up 16.5 percent and a single-family home at $210,000.
