(The Center Square) – The Illinois housing market continues to be a seller's market.
The number of Illinois home sales and the available housing inventory for May dropped considerably in comparison to May of last year. In the latest report from Illinois Realtors, sales decreased over 22% in May compared to May 2022, and there were over 6,000 fewer homes for sale in Illinois last month compared to last year at this time.
According to Daniel McMillen, head of the Stuart Handler Department of Real Estate at the University of Illinois at Chicago, low housing inventory is hampering the market.
Daniel McMillen, professor and associate dean for Faculty Affairs, Stuart Handler Department of Real Estate, University of Illinois at Chicago
“The really big change that we see is that the available housing inventory is down about 27% and is at the lowest it's been since 2008,” said McMillen Thursday during a virtual news conference.
McMillen said higher interest rates have contributed to slower sales, but he expects them to ease as the year goes on.
“As the inflation rate starts to fall, you are going to see interest rates continue to fall, but I don’t expect them to get down anywhere near where they were,” McMillen said.
According to data from Freddie Mac, the going rate for a 30-year fixed-rate mortgage was about 6.4%. In May 2022, it was 5.2%.
The monthly median price of a home in Illinois in May was $275,000, slightly lower than May 2022. McMillen expects home prices to stabilize as the year progresses.
“We expect to see some decline in fall and winter, but I think it's just normal, seasonal declines and nothing really major,” McMillen said. “I don’t think you are going to see any big increases in home prices until next spring.”
Nationwide, Morgan Stanley housing analysts have reversed course and now don’t think prices are going anywhere.
“We now expect home prices to end the year flat to December 2022 as opposed to our prior base case of -4%,” wrote Morgan Stanley strategist James Egan, according to Yahoo! Finance.
The Morgan Stanley housing strategists called the U.S. housing market “a study into the juxtaposition of affordability and supply.”
