Chicago Area Homes Sales Plunge 29 Percent

Sales of existing homes in the Chicago metrpolitan area plunged 29 percent in May from the year-ago number, and the median price slipped 0.5 percent to $251,000, the Illinois Association of Realtors said Thursday.
There were 6,927 homes sold in the nine-county region last month, compared with 9,751 sold in May 2007, the association said.
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A worker walks in front of a sold sign in Palo Alto, Calif., Tuesday, June 24, 2008. Sales of existing homes edged up slightly in May although median home prices continued to fall, Thursday, June 26, 2008. (AP)
Month-over-month sales showed improvement, rising 13.7 percent in the metropolitan area from April. In the state, sales rose 17.3 percent, the fourth consecutive month-to-month increase.
“Forecasts for the next three months suggest continuing declines in home sales compared to the same months last year, but month-to-month forecasts suggest positive growth in June, declines in July, and almost no change in August,Ó said Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory of the University of Illinois.
Nationally, sales fell 14.5 percent in May from a year ago, and the price fell 6.3 percent to $208,600, the National Association of Realtors said. That was the fifth biggest year-over-year price decline on records that go back to 1999.
But month-over month sales rose by 2 percent from April to 4.99 million units. It was only the second sales increase in the past 10 months, but it was not viewed as a sustained rebound. Many economists believe that prices will have to decline more before the housing industry can mount a sustained recovery.
Paul Bishop, senior economist for the Realtors, said that for the past few months sales have been rebounding in parts of the country that had been hardest-hit by the housing bust, while sales have weakened in some areas that formerly had been immune from the overall downturn.
Distressed areas that now are seeing sales gains included Sacramento, the San Fernando Valley and Monterey in California; Sarasota, Fla.; and Battle Creek, Mich.
The inventory of unsold homes dropped by 1.4 percent to 4.49 million units, which represents a 10.8-month supply at the May sales pace, down from a 11.2-month supply in April. That’s still about double the inventory level that existed during the five-year housing boom.
‘‘Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets,’’ said Lawrence Yun, the Realtors’ chief economist.
However, rising mortgage foreclosures are dumping even more homes onto the already glutted housing market.
Many economists predict sales will keep falling through the summer and prices will not start to rebound until the spring of next year.

Contributing: AP