Chicago home sales fell 20% amid high interest rates, low inventory

Annual median home price rose by 4.6 percent to $324,900

Chicago Home Sales Dropped 20% in 2023
(Illustration by The Real Deal with Getty)

It was a hard slog for Chicago’s housing market in 2023, with high interest rates and low inventory, but experts are optimistic that brighter days are on the horizon.

There were 89,942 home sales in Chicago last year, marking a 20 percent decline from 2022, the Chicago Tribune reported, citing data from Illinois Realtors. While the number of home sales declined in the final three months of 2023, compared to a year prior, prices remained elevated. More than 132,000 home sales closed in Illinois last year, an 18 percent increase from the previous year.

Nationwide, existing-home sales hit a 30-year low in December, while reaching a record median price of $389,800, according to the National Association of Realtors. 

However, the residential real estate landscape is expected to improve this year, after mortgage rates peaked at nearly 8 percent last year.

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“That will really bring sellers back to the market who are finally able to say ‘OK I can do this rate. I am giving up that other one,’ and inventory will increase,” Chicago Association of Realtors president Drussy Hernandez told the outlet. “With more inventory, and buyers more comfortable, if we see those rates being consistently lower, everyone will see a market that will improve in 2024.”

The annual median home price in Illinois increased by 3.5 percent to $269,000 in last year, while rising by 4.6 percent to $324,900 in the Chicago metropolitan area. Within the city limits, the median price fell by 1.5 percent to $330,000, the outlet reported.

Redfin and Zillow predict improved affordability for homebuyers this year. 

The 30-year fixed-rate mortgage average declined from 7.79 percent in October to 6.61 percent in December, according to Freddie Mac. Rates are expected to range between 6 and 7 percent this year, with 6.5 percent being the new normal, according to Lawrence Yun, chief economist for the National Association of Realtors

Yun anticipates stable home prices this year due to balanced supply and demand levels, along with a strong labor market to help with housing affordability. 

—Quinn Donoghue 

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