Chicago home prices rose and they sold faster in May, just as the Federal Reserve pushed up interest rates.
Median prices rose 5.5 percent to $327,000 in May from a year earlier, according to the Illinois Association of Realtors. While the volume of homes sold dropped almost 11 percent to 11,641 homes, they spent 21 days on the market, compared with 26 days in May of 2021.
Sales may increase, even as inflation is a worry for buyers, especially at the higher end of the market, and borrowing money for a downpayment gets more expensive, according to Dr. Daniel McMillen, head of the Stuart Handler Department of Real Estate at the University of Illinois at Chicago College of Business Administration. Illinois sales remain low, and foreclosures have fallen “significantly,” he said.
Inventory is a challenge. Just 15,694 single-family homes were available for sale last month, down 26 percent from a year earlier.
“Despite rising mortgage rates and a significant drop in inventory, buyer activity remains high, as shown by the continued decline in days on market and slight uptick in median sales prices,” said Antje Gehrken, president of the Chicago Association of Realtors and president of A.R.E. Partners. “The market continues to slowly return to pre-pandemic behavior and normalize after a frantic pace.”
Average 30-year fixed mortgage rates broke 6 percent last week, just two months after topping 5 percent. That’s still well below the 18 percent reached in the 1980s.
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