Home sales in the Chicago area fell 15.3% in January on an annual basis, reflecting affordability challenges as well as low inventory. Even with interest rates moderating to the low 6% range, home prices are high. In our market the average sales price is $441,676. With a downpayment of 20% you would need a family income of $120,000 to afford the average home while the median family income in the Chicago area is $82,000 (FRED). Meanwhile, would be sellers are afraid to put their homes on the market because they have less selection in a low inventory market.

However, the Spring market has just begun and 2026 appears to have shifted the market in favor of buyers. Nearly two-thirds of buyers nationally purchased a home below the original listing price in 2025, according to the Wall Street Journal, with an average discount of 8%. In the Chicago market, the list price to closing price ratio, that is the asking price vs the actual sold price, was 97% in January, down from 100% last June and the ratio is continuing to fall. This trend represents a healthy change in market dynamics as affordability improves throughout the US.

Prices in the Chicago market are flat or falling slightly in certain neighborhoods and interest rates are predicted to be going down to a range of 5.9% to 6.1 in 2026. The Institute for Housing Studies forecasts steady but more modest price growth in the Chicago market of 5% for 2026. Areas that rose sharply in recent years, such as Miami, Dallas, Denver, Phoenix, and San Francisco are seeing falling prices.

In 2025, the economy grew 2.2%, measured from the fourth quarter of the prior year. That was slower than 2.4% growth in 2024 and the weakest since 2022. The stock market is rising, with the Dow Jones Industrial Average crossing over the 50,000 mark for the first time, indicating investor confidence. The job market improved slightly, with 130,000 jobs created in January, mostly in healthcare, while unemployment fell to 4.3%. Consumer spending rose 3.5% in Q4, accelerating from 2.5% in Q2. Wages grew 3.7% in 2025 well ahead of inflation at 2.4%, according the Federal Reserve Bank of Atlanta. Finally, Goldman Sachs is predicting continued economic growth in 2026 of 2.5% annually. A growing economy is always good news for real estate and the spring market should be strong.

There has never been a better time to invest in a home, but finding the right one can be challenging. Buying or selling, I have the experience and market knowledge to help you successfully navigate your next move. Contact us today for a free, no-obligation real estate review!