Online Staff Report
As a sign of continued vigorous growth in the local housing market, the three-month rolling average home price increased 7.5 percent in October over last October, marking the fourth straight month of year-over-year increases. The average home sold in the Rock River Valley also reached its highest October average in five years.
The three-month rolling average price for homes sold in Winnebago, Boone and Ogle counties in October was $112,507, 7.5 percent above the average price of $104,660 in October last year. This was the highest October rolling average price since $119,968 in 2010. The year started out with six straight months of year-over-year decreases, followed by four months of year-over-year increases.
Home sales were also up in October. Realtors sold 372 homes and condos in October, up 2.2 percent from 364 properties sold in October 2013. Home sales typically drop 2.4 percent from September to October, as housing sales begin to wind down for the year, heading into the winter months.
“The Rockford housing market continues its recent pattern of rising prices,” said Steve Bois, CEO, Rockford Area Realtors. “The 7.5 percent three-month rolling average price increase in October was the largest year-to-year increase this year.”
A new survey shows consumers feel more positive about the U.S. housing market and expect prices to continue going up. According to the October 2014 National Housing Survey from Fannie Mae, the number of consumers who say that now is a good time to buy a house is 65 percent with 44 percent believing that housing prices will rise in the next 12 months.
The most telling statistic — 44 percent of respondents say that now is a good time to sell a house — is an all-time high for the Fannie Mae survey.
“Consumers are feeling better about the housing market because they’re feeling more optimistic about their own economic situation,” Bois said. In Fannie Mae’s survey, 45 percent of respondents expect their personal financial situation to improve in the next 12 months, up from 38 percent a year ago, near its highest level since the survey’s inception in June 2010.
Rockford-area housing sales also showed strong property turnover rates and sound sales pending in October. Homes are selling 6.59 months on average; a housing market is considered balanced when inventory reaches a six-month level. Sales pending, an indicator of future sales, hit 571 properties in October, the second-largest October level since stats have been collected, dating back nine years.
“These dynamics have resulted in strong housing sales and are extending the buying season well past the usual summer peak to later in third and fourth quarters,” Bois said.
One segment dropping off in sales is first-time home buyers. While first-timers typically account for 43 percent of homes sold, new statistics from the National Association of Realtors show the number of first-time buyers making up only 30 percent of the current market.
“We need this important segment to rise up to normal levels to help boost the housing recovery,” Bois said.
Bois said housing affordability remains high and mortgage rates low, both of which will continue to buoy the market, especially with first-time home buyers.
The Illinois Housing Affordability Index climbed higher in September (latest month for which figures are available), compared to August (240 vs. 224). The higher the number, the greater the housing affordability. At the same time, fixed mortgage rates continue to hover near year lows, giving home buyers more borrowing power. Last week, 30-year fixed-rate mortgages averaged 4.02 percent, compared to 4.53 percent, where they started the year.
“Looking at the year to date, unit sales are currently down 1.5 percent year over year, but we expect 2014 will end up close to last year’s totals,” Bois said. “Heading into next year, we will experience more market bumps along the way, but the housing recovery is expected to continue in 2015.”
Posted Nov. 13, 2014