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Chicago home prices flat in latest report, lag national growth rate

Home prices fell slightly between September and October but grew 3.3 percent year over year

(Credit: iStock)
(Credit: iStock)

Chicago-area home prices were 3.3 percent higher in October than they were 12 months prior, continuing on a path of steady growth but stubbornly lagging most other American cities.

Chicago’s annual growth rate has hovered near 3 percent for most of the year, according to the most recent S&P CoreLogic Case-Shiller Index released this week.

The index noted a 0.3-percent dip in Chicago-area home prices between September and October. But on a seasonally-adjusted scale, that translates to a 0.6 percent month-over-month growth rate. Prices in the region slipped by 0.1 percent between August and September, for a seasonally-adjusted growth rate of 0.5 percent.

National home prices averaged a 5.5 percent year-over-year growth in October, compared to 6.5 percent just six months prior, as the housing market continues to cool.

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Of the 20 major cities studied in the report, only New York and Washington, D.C. registered slower growth rates than Chicago, respectively rising 3.1 and 2.9 percent from October 2017 to October 2018. Las Vegas registered the sharpest annual home price growth, at 12.8 percent.

The combination of rising prices and higher interest rates is making homeownership affordable to fewer Americans than it was previous years, according to David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. Fixed-rate 30-year mortgages rose from 4 percent to 4.75 percent this year, and home prices have risen 54 percent since 2012.

The Chicago area’s relatively slow job growth may help explain its sluggish housing market, Blitzer said. The tri-state region’s employment numbers ticked up by 0.8 percent between August 2017 and August 2018, compared to 1.7-percent growth nationwide, according to the U.S. Bureau of Labor Statistics.

Chicago-area home sales have dipped in recent months even while home prices keep rising, a trend brokers blame on a lack of sufficient inventory.

And a report from Realtor.com suggested Chicago will see declines in both sales and prices next year, putting it in the running for the weakest housing market in the country.