(The Center Square) – The once red hot Illinois housing market continues to cool off.
According to data released by Illinois Realtors, home sales in July were down 21.4% compared to the same period last year.
Daniel McMillan, head of the Stuart Handler Department of Real Estate at the University of Illinois at Chicago, said there is one major factor that has affected sales.
“I think the main culprit for this is really just the fact that interest rates have stayed high and you had this long period of really low interest rates, so you have a lot of homeowners who are sitting on fairly low interest rates and they are reluctant to put their house on the market,” McMillan said.
Available housing inventory in July 2023 totaled 19,432 homes for sale, a 34.7% decrease from 29,774 homes on the market in July 2022.
As a result of low inventories, buyers are now looking at new construction. Sales of newly constructed homes nationwide were up 4.4% in July from the month before, and up over 31% from a year ago. The spike in sales indicates that buyers are still eager to buy homes, despite steep borrowing costs and elevated prices.
In Illinois, the statewide median price of $285,000 was 5.6% higher than it was last year at this time. The median price of a home in the Chicago Metro Area in July 2023 was $340,000, up 5.3% from $323,000 in July 2022.
“Our forecasts indicate that prices will continue to decline over the next three months, although they will remain higher than at this time last year,” McMillan said.
Where interest rates go is anyone’s guess. Based on Freddie Mac data, the monthly average commitment rate for a 30-year, fixed-rate mortgage was 6.84% in July 2023, up slightly from the previous month’s 6.71%.
Sarah Ware, president of the Chicago Association of Realtors, said there are several factors affecting the housing market this time of year.
“We’re seeing buyers and sellers in a holding pattern due to student loan payments restarting, the school year beginning and a workforce returning to their offices,” she said in a statement.
