Real estate industry

Despite Inventory Issues, Illinois Real Estate Sector Remains Robust | Illinois

(The Center Square) – Despite rising mortgage rates and low inventories, the Illinois housing market continued its momentum in May.

According to Illinois Realtors, sales are down but prices are up more than 6% and homes are selling faster than a year ago. The average Illinois home sold in 24 days in May 2022, up from 33 days a year ago.

“Prices have risen again while sales numbers remain low across Illinois,” said Dr. Daniel McMillen, head of the Stuart Handler real estate department at the University of Illinois at Chicago College of Business Administration. “The SHDRE forecast now indicates an increase in the number of sales over the next three months.”

Two of the hottest real estate markets are in the downstate, where sales and prices have increased. The median price of a home rose in May year-over-year by 27.3% in the Kankakee area and 23.4% in the Carbondale/Marion area.

In the Chicago metro area, the median home sale price in May 2022 was $327,000, up 5.5% from $310,000 in May 2021.

Industry analysts say higher mortgage rates, which recently climbed to 6%, will likely end up stifling the relentless escalation in home prices. Fewer buyers are submitting mortgage applications. According to Mortgage Bankers Association data, the decline is more than 15% from a year ago.

Regarding low housing inventories, McMillen said there are still challenges for new construction.

“It’s been really difficult for builders to add to the housing stock right now,” McMillen said. “There are still these major bottlenecks in supply.”

With higher interest rates and house prices, real estate economists now predict existing home sales will fall 6.7% from a year ago. They note that the drop in sales could give inventory levels a boost.

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