Rising home prices, higher interest rates and increased building material costs have pressured housing affordability to a ten-year low, according to the National Association of Home Builders. Keen market observers have been watching this situation take shape for quite some time. Nationally, median household income has risen 2.6% in the last 12 months, while home prices are up 6.0%. That kind of gap will eventually create fewer sales due to affordability concerns, which is happening in several markets, especially in the middle to high-middle price ranges.
New Listings in the City of Chicago were down 2.0 percent for detached homes and 3.0 percent for attached properties. Listings Under Contract increased 5.3 percent for detached homes but decreased 3.8 percent for attached properties.
The Median Sales Price was up 9.3 percent to $250,000 for detached homes but was down 2.2 percent to $309,000 for attached properties. Months Supply of Inventory decreased 19.6 percent for detached units but increased 10.1 percent for attached units.
While some are starting to look for recessionary signs like fewer sales, dropping prices and even foreclosures, others are taking a more cautious and research-based approached to their predictions. The fact remains that the trends do not yet support a dramatic shift away from what has been experienced over the last several years. Housing starts are performing admirably if not excitingly, prices are still inching upward, supply remains low and consumers are optimistic. The U.S. economy is under scrutiny but certainly not deteriorating.
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