The Case Shiller home price index for Chicago was just released a few minutes ago. For the 4th month in a row home prices in Chicago rose, with single family homes rising 1%, while condominium prices rose 0.1%. This puts single family home prices back at the level they were in December 2002 and condominium prices back to May 2003 levels. Here is the long term trend chart:
Single family home prices are 11.6% below that red long term trend line, which indicates that there is some upward pressure to return prices to the "norm". However, not in the short run. For whatever reason (it's the economy, stupid) home sale activity in the Chicago area is terrible. As I've reported before, August sales were down 22.9% from last year, with 40% of those sales being distressed properties. Clearly, only the best deals are selling. As we move into the off season for home sales, serious sellers have no choice but to cut their prices. Therefore, expect the Case Shiller index to report decreases by the time they get around to the September/October numbers.
Why do we have to wait until the September/October numbers are released? Because the Case Shiller index uses a 3 month trailing average. The numbers for September will also include July and August prices. I suspect that July is the first month with real price declines.
Note: the Case Shiller index uses a very sophisticated technique to develop their home price index. They actually compare the recent sale prices of specific homes to the previous sale prices for those same homes, which is the logical way to do this. You should ignore all the other myriad home price data that gets released throughout the month by various realtor organizations or the US government because they are a meaningless average of all homes sold. If more of the expensive homes get sold in one month then these averages move up. In other words, it's totally dependent upon the mix of homes sold, which screws up the data.