Current Illinois Housing Market Trends
Key Takeaways
- Home Sales Decline: In August 2024, home sales in Illinois plummeted by 6.5% year-over-year.
- Rising Inventory: The inventory of homes for sale increased by 8.0% from last year.
- Median Price Growth: Median home prices rose to $295,000, a 5.4% increase from August 2023.
- Diverse Regional Trends: Certain regions like Rockford are projected to grow, while others such as Peoria may face price declines.
The Illinois housing market's performance has varied significantly in 2024. As reported by Illinois REALTORS®, total home sales, including single-family homes and condominiums, fell to 12,831 in August 2024—a substantial drop from 13,727 sales recorded in August 2023. Despite this downturn in sales, there has been an 8% growth in the total number of homes available for sale, totaling 21,932 listings statewide.
The median home price trend reveals more complexity. As of August 2024, the median price stood at $295,000, a rise from $280,000 the previous year. This suggests that while fewer homes are selling, those that do are likely commanding higher prices. This trend indicates a competitive market, particularly in areas where inventory remains constrained.
What’s Driving the Housing Market in Illinois?
Several factors landscape the current trajectory of the Illinois housing market:
- Interest Rates: Interest rates significantly impact buying behavior. The current average commitment rate for a 30-year fixed mortgage decreased to 6.50% in August 2024, down from 6.84% in July. Even so, these rates remain above historical lows, and they discourage some prospective buyers from making a purchase. With expectations of potential cuts in Federal Reserve rates, buyers may start to gain more purchasing power, which could spark renewed interest in the market.
- Economic Conditions: The state of the economy plays a crucial role in the housing market. Mixed signals from economic indicators, as observed by Geoff Smith from the Institute for Housing Studies, create uncertainty. Higher employment rates can lead to increased consumer confidence, but inflation and economic stagnation can dampen buying enthusiasm.
- Inventory Levels: The increase in available housing options, with listings soaring to 21,932 statewide, is vital for balancing supply and demand. A higher inventory typically leads to more negotiations during home purchases, fostering an environment where prices either stabilize or decline slightly in less competitive areas. However, this growth in inventory is uneven. While some regions see plenty of options, others—like certain neighborhoods within Chicago—continue to face tight supply, driving prices upward even amid declining sales.
- Regional Disparities: Illinois is home to diverse regions with distinct market characteristics. In the Chicago Metro Area, home sales dropped 6.6% compared to the prior year, while median prices saw a notable increase to $355,000 in August 2024. Cities like Rockford are expected to show resilience, with forecasts indicating an increase in home prices. In contrast, cities like Peoria and Springfield may experience declines, as the outflow of residents continues to affect demand.
Illinois Housing Market Forecast 2025-2026
An in-depth examination of projected trends reveals distinctions in price trajectories across various areas:
- Chicago, IL: Forecasts predict a slight decline of 0.3% by late 2025 (Zillow), mainly due to high inventory levels and economic fluctuations.
- Rockford, IL: Expected to see a robust growth of 2.7%, driven by a strong buyer demand in the region.
- Peoria, IL: Projected to decline by 0.5%, reflecting challenges from local economic conditions and demographic shifts.
- Champaign, IL: It may face a decline of 0.7% as demand softens.
- Conversely, smaller cities like Bloomington and Kankakee are experiencing stability with predictions of minimal increases, aiding in maintaining balanced real estate activities.
| Region Name | Region Type | State | Forecasted Price Change by Sept 2024 (%) | Forecasted Price Change by Nov 2024 (%) | Forecasted Price Change by Aug 2025 (%) |
|---|---|---|---|---|---|
| Chicago, IL | MSA | IL | 0.2 | -0.1 | -0.3 |
| Peoria, IL | MSA | IL | -0.2 | -0.3 | -0.5 |
| Davenport, IA | MSA | IL | -0.4 | -1.2 | -2.6 |
| Rockford, IL | MSA | IL | 0.5 | 0.7 | 2.7 |
| Champaign, IL | MSA | IL | 0.2 | 0 | -0.7 |
| Springfield, IL | MSA | IL | -0.2 | -0.7 | -2 |
| Bloomington, IL | MSA | IL | 0.1 | 0 | 0.4 |
| Carbondale, IL | MSA | IL | -0.1 | -0.5 | -2.8 |
| Kankakee, IL | MSA | IL | 0.1 | 0.1 | 0.4 |
| Decatur, IL | MSA | IL | -0.5 | -0.9 | -1.3 |
| Quincy, IL | MSA | IL | 0 | -0.7 | -2.5 |
| Danville, IL | MSA | IL | -0.6 | -0.2 | -1 |
| Charleston, IL | MSA | IL | 0.1 | 0.4 | -0.7 |
| Sterling, IL | MSA | IL | -0.3 | -0.1 | -0.5 |
| Rochelle, IL | MSA | IL | -0.2 | -0.4 | -0.5 |
| Galesburg, IL | MSA | IL | -0.3 | -0.9 | -3.6 |
| Freeport, IL | MSA | IL | 0.4 | 1.8 | 4 |
| Jacksonville, IL | MSA | IL | -0.6 | -1.1 | -3.8 |
| Centralia, IL | MSA | IL | -0.3 | -0.5 | 0.3 |
| Mount Vernon, IL | MSA | IL | -1 | -1.7 | -4.3 |
| Pontiac, IL | MSA | IL | -0.1 | 0.2 | 0.5 |
| Effingham, IL | MSA | IL | -0.2 | -0.8 | -1.5 |
| Dixon, IL | MSA | IL | -0.4 | -0.2 | -0.6 |
| Taylorville, IL | MSA | IL | -0.7 | -1.1 | -2.5 |
| Lincoln, IL | MSA | IL | -0.4 | -0.7 | -3.6 |
| Macomb, IL | MSA | IL | -0.1 | -0.5 | -2.5 |
Table Explanation:
- Data: Zillow
- Region Name: The name of the city or town.
- Region Type: Metropolitan Statistical Area (MSA).
- State: The state abbreviation.
- Forecasted Price Change: Represents percentage changes in home prices for specified future dates, aiding readers in understanding the price trajectory in their areas of interest.
Outlook on Home Price Trends: Will Prices Drop?
Home prices across Illinois are expected to stabilize, with regional nuances in performance. While a crash seems unlikely, specific areas may experience gradual price decreases fueled by over-saturation in the market or economic downturns.
- Chicago's Metrics: The metrics from Chicago illustrate a decline in closed sales reflective of inventory limitations as potential sellers weigh their options in a competitive market. With the significant offer to price ratio shifting, a balanced approach among buyers and sellers is vital.
- Peoria and Springfield: Areas like Peoria may continue facing declining prices as the market adjusts to increasing inventory combined with economic challenges affecting buyer sentiment.
Potential 2026 Illinois Housing Market Outlook
Looking toward 2026, predictions become increasingly speculative as the market reacts to external factors such as broader economic conditions, shifts in buyer demographics, and policy changes on a state and federal level. It’s possible to infer several possible trends:
- Growth in Sales Activity: If mortgage rates remain favorable, a resurgence in sales activity is plausible as buyers waiting on the sidelines take advantage of better conditions.
- Price Stabilization: We expect prices to stabilize, as competition resumes and inventory balances out the market. Continued inventory growth can contribute to price moderation.
- Regional Performance Gaps: The performance disparity among regions will likely persist, with urban centers demonstrating different dynamics compared to suburban and rural markets.
Regional strategies may need to focus on attracting investment and incentivizing homeownership to stimulate more balanced developments in less accessible markets.
Illinois Housing Market Snapshot
Key Highlights
Average Home Value: $295,000 (increased from $280,000 in 2023)
Sales Trend: Sales down by 6.5% year-over-year
Regions on the Rise
| Region | Forecasted Growth by 2025 |
|---|---|
| Rockford | 2.7% |
| Bloomington | 0.4% |
Regions Facing Challenges
| Region | Forecasted Decline by 2025 |
|---|---|
| Peoria | 0.5% |
| Champaign | -0.7% |
Overall Market Sentiment
Sales Trends: Expected continued volatility with varying performance across regions.
Market Outlook: Mixed, but with opportunities for growth in select markets.
The Illinois Housing Market Forecast for 2025 points to a blend of growth opportunities and challenges for potential homebuyers and investors. Increased inventory levels may normalize some pricing pressures, but specific areas will likely continue experiencing competitive dynamics that influence prices differently. Both buyers and sellers must navigate this intricate market landscape, paying close attention to regional nuances that dictate performance.
Illinois Housing Market Predictions 2024
The annual housing market forecast for Illinois for 2024 provides valuable insights into the upcoming months. These forecasts have been presented to Illinois Realtors® by the UIC Stuart Handler Department of Real Estate.
The Illinois housing market is poised for a strong performance in 2024, with positive trends forecasted for both Illinois and the Chicago Primary Metropolitan Statistical Area (PMSA). The predictions indicate growth in sales and median prices, providing a promising outlook for homebuyers, sellers, and investors.
Sales Forecast
The sales forecast for June, July, and August suggests an increase on both a yearly and monthly basis for Illinois and the Chicago PMSA.
- Annual Increase: The three-month average forecasts for Illinois point to an increase in the range of 2.9% to 3.9%. For the Chicago PMSA, the expected annual increase is in the range of 3.8% to 5.1%.
- Monthly Increase: On a monthly basis, three-month average sales are forecast to increase by 1.3% to 1.8% for Illinois and by 1.3% to 1.7% for the Chicago PMSA.
These figures reflect a robust market environment, driven by strong demand and favorable economic conditions. The anticipated sales growth indicates a healthy and active real estate market throughout the summer months.
Median Price Forecast
The median price forecast also indicates positive annual growth for June, July, and August in both Illinois and the Chicago PMSA.
- Illinois Median Price Growth: The median price is forecast to change by 7.3% in June, 7.0% in July, and 6.9% in August.
- Chicago PMSA Median Price Growth: For the Chicago PMSA, the forecasted median price changes are 6.7% in June, 7.0% in July, and 5.4% in August.
The projected increases in median prices are a testament to the rising value of properties in both Illinois and the Chicago PMSA. These price trends reflect the desirability of the region, supported by economic growth, population influx, and limited housing inventory.
Market Drivers
Several key factors are driving the positive trends in the Illinois housing market:
- Economic Stability: A strong state economy with low unemployment rates and steady job growth contributes to consumer confidence and increased purchasing power.
- Low Interest Rates: Favorable mortgage rates continue to make homebuying more accessible and affordable for many buyers.
- Population Growth: Illinois, and particularly the Chicago PMSA, continues to attract new residents, further driving demand for housing.
- Limited Inventory: A relatively tight supply of homes on the market creates competitive conditions, pushing up prices.
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