Chicago Housing Market January 2026: Prices, Inventory and Mortgage Rates

As 2026 gets underway, the Chicago real estate market shows signs of steadiness and cautious recovery, even as national housing trends continue to evolve. Both buyers and sellers are adjusting to a landscape shaped by falling mortgage rates, rising inventory, and slower but persistent price growth. Whether you’re planning to buy, sell, or simply stay informed, here’s the most current snapshot of what’s happening in Chicago and the Western Suburbs right now.

Local Chicago Market Highlights

Home Prices & Sales Activity

• In December 2025, the median home sale price in Chicago was approximately $365,000, which is about 4.3% higher than a year ago—showing continued modest price appreciation despite broader market softness.

• The data also shows homes selling in roughly 67 days on average, indicating a moderate pace of transactions by Chicago standards.

• This performance reflects a market that isn’t overheated—but still retains enough buyer interest to support price gains and sales activity.

Inventory & Market Balance

• Inventory levels have improved compared to the tight conditions of the last few years, offering buyers more options now than during the peak pandemic years, though supply remains below long‑term historical norms and not yet fully balanced.

• Reports show inventory increased year‑over‑year nationally for the 26th straight month going into 2026, although listings typically decline seasonally in December.

What this means locally: Chicago and its Western Suburbs are transitioning toward a more balanced market, with buyers benefiting from modestly increasing choice and sellers still seeing steady value for well‑priced homes.

Mortgage Rate Trends — A Key Story for Early 2026

One of the most important market forces heading into 2026 is the improvement in mortgage rates:

• As of January 19, the average 30‑year fixed mortgage rate is around 6.1%, slightly higher than the prior week but still within the mid‑6% range.

• This rate marks a significant improvement from the above‑7% levels experienced in 2024 and early‑to‑mid‑2025, and is the lowest rate environment we’ve seen in over three years after several interest rate cuts by the Federal Reserve and policy actions intended to stimulate the housing market.

Why this matters: Lower mortgage rates reduce monthly payments and improve purchasing power, motivating both first‑time buyers and move‑up buyers to return to the market—even in traditionally slower winter months.

National Housing Market Trends Impacting Local Buyers & Sellers

Sales & Inventory Dynamics

• Nationally, existing home sales for December 2025 rose 5.1% month‑over‑month and 1.4% year‑over‑year, indicating a late‑season pickup in activity as mortgage rates eased.

• Inventory remained relatively tight, with approximately 3.3 months of supply—below a balanced 5–6 month market.

Price Growth

• The national median existing‑home sales price was $405,400 in December, the 30th consecutive month of year‑over‑year price gains—showing that prices are still elevated despite seasonal cooling.

Economic & Policy Context

• Economists generally expect the U.S. housing market to trend toward gradual recovery in 2026, supported by inventory gains and mortgage rate declines, though affordability challenges remain a major concern.

• Nationally, housing inventory growth has been slower than expected, and even with modest increases, supply is still constrained compared to historical norms.

What this means locally: Chicago’s trends largely mirror national signals—slower but growing sales, tight inventory, and sensitive price movements driven by interest rates and buyer sentiment.

What This Market Means for You

For Buyers

• More opportunity, less frenzy: Inventory isn’t exploding, but the combination of more listings and lower mortgage rates gives buyers more leverage than last year.

• Strategic advantage now: Winter markets typically mean less competition and more negotiating room, so early 2026 can be a smart time to act.

For Sellers

• Steady value retention: Prices remain elevated compared to prior years, especially for well‑positioned homes in key neighborhoods.

• Preparation is key: Thoughtful staging and marketing are essential to stand out in a market that’s not as frenzied as mid‑2020s peak conditions.

Final Takeaway

The Chicago & Western Suburbs real estate market entering January 2026 is showing measurable signs of stabilization and opportunity. With mortgage rates easing, inventory gradually rising, and prices holding firm, both buyers and sellers can find strategic advantages in the months ahead—especially as the market builds toward the traditional spring selling season.

If you’re considering a move in 2026, now is a great time to begin your planning with expert insights and local market guidance.

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Ranked as a top 1% team in the Chicagoland market, Cory Tanzer and the Cory Tanzer Group specialize in the Chicago, North Shore, and Western Suburbs real estate market. With deep local market expertise and a proven track record, Cory and his team help clients buy and sell with clarity, confidence, and results.