Updated October 2026
Where is the housing market headed, and what does it mean for you? Whether you're thinking about buying, selling, or just keeping an eye on your home's value, the answer comes down to three things: mortgage rates, home sales, and home prices — and how each is playing out here in Chicago versus the rest of the country.
We update this page regularly with the latest data, expert forecasts, and what we're seeing on the ground across Chicagoland, so you always have a current picture before you make a move.
Quick Answer
Mortgage rates have climbed back above 7% — the 30-year fixed averaged 7.40% in early October 2026, the highest since late 2023 — and major forecasters now expect them to stay in the high-6% to 7% range into 2027. Nationally, that's slowing sales, while inventory is at its highest level in about a decade and price growth has cooled to under 2%, giving buyers more room to negotiate.
Chicago is the exception. Illinois posted the strongest annual home price growth of any state, Chicago-area inventory is shrinking, and many North and Northwest Side neighborhoods have less than two months of supply, with homes going under contract in about 7 to 10 days.
Housing Market Snapshot
Measure | Latest | Trend |
|---|---|---|
30-year fixed mortgage rate | 7.40% | Up from 6.30% a year ago (Freddie Mac, Oct. 8, 2026) |
U.S. existing-home sales (annual pace) | 3.98 million | Down 1.2% year over year (NAR, August 2026) |
U.S. median existing-home price | $429,100 | Up 1.6% year over year (NAR, August 2026) |
U.S. months of supply | 4.9 months | Highest in about ten years (NAR, August 2026) |
Illinois home price growth | +6.8% | Strongest of any state; U.S. is +1.8% (Cotality, August 2026) |
Chicago metro active listings | −5.3% | While U.S. listings rose 5.4%; Chicago median list price up 4.6% (Realtor.com, September 2026) |
Figures reflect the most recent data available as of the update date above.
Where Are Mortgage Rates Headed?
Rates are the single biggest factor in the market right now. After dipping close to 6% early in 2026, they turned higher over the summer as inflation picked back up and the Federal Reserve raised its benchmark rate in August. Freddie Mac's weekly average reached 7.40% on October 8, 2026, the highest since November 2023.
There's an old saying in real estate: when rates go up, they take the escalator; when they come down, they take the stairs. That's been true this year. Forecasts that once called for rates in the low 6s have been revised up:
- Fannie Mae now projects the 30-year rate averaging about 6.7% to 6.8% through the end of 2027.
- The Mortgage Bankers Association expects rates to stay near current levels, with additional Fed rate hikes possible over the next year.
What does that mean for a monthly payment? On a $400,000 loan, principal and interest at 7.40% is about $2,770, compared with about $2,476 at last year's 6.30% — a difference of roughly $294 a month. If rates ease even to 7%, the payment drops to about $2,661.
The takeaway: waiting for a big drop in rates is a gamble the forecasts don't currently support. There are better levers: shopping multiple lenders, and in the right situation, using a seller credit to buy down your rate. And if rates do fall, refinancing remains an option down the road.
Will More Homes Sell?
Nationally, sales have been stuck near a 4-million-a-year pace, well below pre-pandemic norms. Higher rates have kept some buyers on the sidelines, and many homeowners with low-rate mortgages are reluctant to give them up. Still, there are always people who need to move — for a new job, a growing family, or a change in life — and forecasters expect activity to pick up modestly as the market adjusts:
Fannie Mae Forecast | 2025 | 2026 | 2027 |
|---|---|---|---|
Existing-home sales | 4.08M | 4.06M | 4.22M |
30-year mortgage rate (annual average) | — | 6.5% | 6.7% |
Home price growth (Q4 to Q4) | — | 2.3% | 1.0% |
Source: Fannie Mae Economic & Strategic Research, September 2026 Housing Forecast.
Meanwhile, national inventory has been rebuilding. Active listings are up year over year, months of supply is at its highest level in about a decade, and the share of listings with price cuts hit its highest September level since 2018. In much of the country, that's shifting leverage toward buyers.
Will Home Prices Go Up or Down?
Nationally, prices are still rising, just slowly. The median existing-home price was up 1.6% year over year in August, and Cotality forecasts about 1.7% growth over the next 12 months. Some markets — particularly in the South and West, where new construction added lots of supply — are seeing small declines. A broad crash isn't in the forecasts: most owners have substantial equity, and lending standards have been far tighter than they were before 2008.
Here, the story is different. Illinois led the nation with 6.8% annual price growth, and Cotality expects the Midwest to keep outperforming, because limited inventory and little new construction are holding prices up. That's exactly what we see in our own neighborhood data.
What's Happening in Chicago's Neighborhoods
While inventory grows nationally, the Chicago metro is moving the other way: active listings are down and median list prices are up year over year. On the North and Northwest Side, the market is even tighter. Our latest neighborhood reports show less than two months of supply in most areas — under half a month in some — with well-priced homes going under contract in about a week:
- Andersonville: 0.4 months of supply, 7-day median market time
- Wicker Park: 0.5 months of supply, 9 days
- Bucktown: median price above $1 million, 9 days
- Lincoln Park: 1.2 months of supply, 7 days
- Logan Square: 2.2 months of supply, 10 days
- Avondale / Roscoe Village: 1.9 months of supply, 9 days
Higher rates are affecting Chicago too — they shrink buying power and keep some buyers out. But with so few homes for sale, the national shift toward buyers hasn't arrived here in the same way. Well-prepared buyers still need to move quickly, and well-priced listings still sell fast.
What the Experts Are Saying
Lawrence Yun, Chief Economist, National Association of Realtors:
"The ample supply of homes for sale on the market is giving homebuyers better opportunities to negotiate."
Danielle Hale, Chief Economist, Realtor.com:
". . . buyers are gaining leverage, but higher mortgage rates are limiting how much of that opportunity they can use."
Dr. Selma Hepp, Chief Economist, Cotality:
". . . severe inventory constraints in the Midwest and Northeast are insulating home prices from broader declines."
Jake Krimmel, Senior Economist, Realtor.com:
"More owners are acknowledging that today's buyers need a lower price."
Sam Khater, Chief Economist, Freddie Mac:
"As market conditions continue to evolve, borrowers should remember that shopping around for a mortgage rate and getting multiple quotes can potentially save them thousands over the loan's lifetime."
Lisa Sturtevant, Chief Economist, Bright MLS:
"Market performance will hinge on local economic conditions . . ."
Explore the Full Compass Market Outlook →
Compass Research · With Camille Canales
For a deeper dive into inventory, pricing, mortgage rates, and buyer behavior, explore Compass's housing market outlook with local insight from broker Camille Canales.
What This Means for You
If you're buying: Get fully pre-approved before you start touring, and compare quotes from more than one lender. Know your ceiling at today's rates, not the rates you hope for. In tight neighborhoods, be ready to act within days. And ask about negotiating tools like seller credits, which tend to work best on homes that have sat longer than their neighbors.
If you're selling: Low local inventory is working in your favor, but higher rates mean buyers are more payment-sensitive than they were a year ago. Pricing precisely from the start matters more than ever, since overpriced listings sit while well-priced ones sell in days. Pre-listing repairs and documentation help keep inspection negotiations short (see our vintage home maintenance guide).
If you own a condo: New Fannie Mae and Freddie Mac rules take effect for loans applied for on or after January 4, 2027, and they could affect your buyers' financing. See what the new condo reserve rule means for owners and buyers.
Frequently Asked Questions
Will mortgage rates go down?
Current forecasts don't expect a significant decline in the near term. Fannie Mae projects the 30-year rate averaging about 6.7% through 2027, and the Mortgage Bankers Association expects rates to stay near current levels. Rates move with inflation and the economy, so forecasts can change quickly.
Will home prices drop in Chicago?
Current data doesn't point that way. Illinois has led the nation in price growth, and Chicago-area inventory is shrinking. Individual homes can still sell below expectations if they're overpriced or need work, and conditions vary by neighborhood and property type.
Is it a buyer's market or a seller's market?
Nationally, the market is moving toward balance, with more inventory and more price cuts. In most of Chicago's North and Northwest Side neighborhoods, it remains a seller's market, with well under the roughly six months of supply usually considered balanced.
Should I wait to buy until rates come down?
That depends on your situation, but waiting carries its own risk: if rates fall, more buyers return and competition for limited Chicago inventory increases, which can push prices higher. Buying when it fits your life and budget, then refinancing if rates fall meaningfully, is a strategy many buyers use.
Bottom Line
National headlines describe a market where rates are high, sales are slow, and buyers are gaining leverage. Chicago is telling a different story: tight supply, rising prices, and homes that still sell in days.
National trends set the stage, but local conditions determine how they play out for you — down to the neighborhood, property type, and price point. If you want to talk through what the latest numbers mean for your plans, let's connect.
What Does the Market Mean for Your Move?
The Camille Canales Group works across Chicago's North and Northwest Side and tracks these markets closely. Whether you're trying to understand what your home is worth, what buying power looks like right now, or how to position yourself in a competitive market, we're happy to talk.
Sources: Freddie Mac Primary Mortgage Market Survey; National Association of Realtors existing-home sales; Fannie Mae Economic & Strategic Research Housing Forecast; Mortgage Bankers Association; Realtor.com monthly housing reports; Cotality Home Price Insights; neighborhood data from MRED / InfoSparks. Data deemed reliable but not guaranteed. Payment examples are illustrative and cover principal and interest only. Forecasts are subject to change. This article is for general information and is not financial advice.
