Iowa farmland values inch higher. Is the ag downturn bottoming out?

Iowa farmland values inched nearly 1 percent higher the past six months, the first increase since September 2013, a new report says.

The hike offers a glimmer of hope that the ag downturn could be hitting bottom.

Iowa farmland values climbed 0.9 percent to $6,545 per acre from September to March, according to a report from the Iowa Realtors Land Institute Chapter No. 2.

The largest increase — 3.2 percent — was in northwest Iowa, according to the six-month survey, released in March and September.

Despite the slight improvement, farmland values are still 2.8 percent lower for the year, the group said, with values falling 3.7 percent from March 2016 to September.

In March 2016, the average value of all tillable acres was $6,732 per acre.

The six-month improvement could be a sign the market is stabilizing, said Kyle Hansen, a farmland broker at Hertz Real Estate Services in Nevada.

"It appears the market is taking a breath and trying to decide which direction it will go in the future," Hansen said.

The direction depends a lot on the price of corn, soybeans and other crops this fall, along with yields, he said.

Iowa farmland values peaked in 2013 but have since fallen along with commodity prices and U.S. farm income.

Nationwide, farm earnings are projected to be $62.3 billion this year, about half of 2013, U.S. Department of Agriculture data shows.

The average value of Iowa's farmland has dropped about 25 percent since March 2013, based on the real estate group's surveys.

Iowa farm income was nearly $5.6 billion in 2015, the most recent data available, down about 42 percent from $9.6 billion in 2011.

"We've had a few hard years of production … so we don't know yet if we've hit bottom and will begin moving higher," Hansen said.

Demand for farmland is strong, Hansen said, but the land available for sale is limited.

Some industry data shows Iowa has about half of the farmland sales it did in 2013, he said. The group survey showed farmers and investors are still the strongest buyers of Iowa farmland.

An Iowa State University report showed in November average farmland values had fallen 5.9 percent to $7,183 per acre over the past year. It was the third annual decline in a row, the first time this has happened since the 1980s farm crisis.

The real estate group based its values on surveys from about 135 ag real estate brokers, appraisers and other professionals.