Chicago Home Prices Growing Faster Than Rest of the Country

Chicagoland’s affordability advantage is slipping fast.

Chicago-area home prices rose 5.5 percent in May, a rate of increase more than four times the national average, as low inventory and sluggish construction pushed values higher, Crain’s reported, citing Illinois Realtors and the National Association of Realtors.

The median home price in the nine-county metro hit $379,900, the highest monthly median on record and a 1.3 percent increase over the previous high, set last June. The city of Chicago posted a median sale price of $390,000, slightly below April’s record but still the highest ever recorded for the month of May.

Nationally, home prices rose just 1.3 percent year-over-year in May, reflecting a broader market slowdown — the S&P CoreLogic Case-Shiller national home price index on Tuesday pegged nationwide price growth at 2.7 percent year-over-year in April. In contrast, Chicago’s pace has accelerated in recent months; prices in the metro area rose 5.7 percent in April and 6.1 percent in March. City prices climbed 8.3 percent in May, more than six times the national rate.

The region’s relatively affordable home prices during the pandemic boom left more room for post-2021 appreciation, analysts say. Unlike affordable-competitive markets like Austin, Phoenix and many parts of Florida, Chicago never saw explosive pandemic-era runups. Price growth has generally slowed but other markets have cooled more dramatically.

But the sharp climb in prices comes as sales volume craters. The metro saw just 8,689 home sales in May, the lowest May tally since 2012, excluding during the pandemic in 2020. In the city, only 2,266 homes sold, a 13-year low for the month.

Behind the slowdown is a prolonged inventory crunch. Many homeowners locked into mortgages below 5 percent are reluctant to list, suppressing supply during what would typically be the busiest season of the year. New listings have either lagged behind or barely matched last year’s weekly totals throughout the spring, according to Midwest Real Estate Data.

Meanwhile, new home construction remains far below what’s needed. A separate report released this week by the Illinois Economic Policy Institute found that the state is short about 142,000 homes. To catch up, builders would need to deliver 227,000 units over the next five years, more than double the current pace.

— Judah Duke