Learn more about the housing market in Illinois

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.

Key Takeaways

1. Illinois is trending toward a buyer-leaning market in 2026, with longer days on market, easing mortgage rates, and less seller leverage than in prior years.
2. Home prices are still rising statewide, but growth is uneven, and is stronger in metro areas like Chicago and Aurora, slower or stabilizing elsewhere.
3. Inventory remains constrained, as new construction has not rebounded to pre-pandemic levels, limiting affordability gains.
4. Foreclosure activity is elevated, ranking among the highest in the U.S., which may create both risk and opportunity for buyers and investors.

Illinois Housing Market Overview 

Though it is nicknamed ‘the prairie state’ for its vast stretches of open grassland, Illinois is also known for its towering Chicago skyscrapers in one of the country’s most populous cities. For this reason, industry in the state is diverse, with both traditionally rural and urban sectors making an impact on the state’s GDP. his mix of rural and urban activity supports a diverse economic base across manufacturing, logistics, finance, and services. According to IBISWorld’s Illinois economic profile, real estate, rental, and leasing was the top of the state’s top-performing industry in 2025 with a growth of 1.6% and an overall GDP of $120.9 billion. As Illinois moves into 2026, the strength of this sector shows the importance of closely tracking housing and rental market conditions statewide.

Experts predicted that the housing market Illinois would experience in 2024 would involve an improved balance between supply and demand. According to Redfin, inventory in Illinois has stabilized compared to last year, as 13,735 new listings were put on the market in October 2025. Overall, the total number of homes sold has increased 1% to 47,275. THe total number of homes sold has in October of 2025 rose 3.7% year-over-year to 12,178, indicating that although overall issues with inventory have not gone away, they are slowly fading.

The same article predicted that skyrocketing 30-day fixed mortgage rates that were approaching 8% would decrease and stabilize throughout the year. This prediction has already proven true, as the average fixed mortgage rate has dipped from 7.79% in October 2023 to 6.77% in October 2025. Based on these changes, the housing market in Illinois may be expected to continue stabilizing throughout 2026. 

Illinois Market Trends 

To understand the Illinois real estate market, it’s important to keep up with trends. Let’s look at some key ones in Illinois: 

Note: These statistics are based on Redfin’s monthly housing data from October 2025.  

Median Home Prices 

The median sale price of a home in Illinois as of October 2025 was $308,200, according to Redfin’s monthly housing market data. This is an increase of 6.8% from October 2024. In Chicago, the median price in April 2024 was predictably much higher at $380,000, an increase of 8.6% from the previous year. In Springfield, the state capital, median prices have risen 3.6% in the last year to $187,000. 

Number of Homes Sold in October 2025

2,110 homes were sold in Illinois in October 2025, which is a slight increase of about 100 houses in Illinois home sales from the previous year. Though this suggests a recent increase in inventory, this number falls considerably short of peaks seen in 2021 and 2022, and will likely stabilize around this number in 2026.

However, it is important to keep in mind that nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%.  

Median Days on Market (DOM) 

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer's market as sales are slower and sellers have less leverage.   

The median DOM in Illinois in April 2024 was 56 days. On average, listings spend 56 days—nearly two months—on the market before they are purchased.  

New Supply Statistics 

Housing supply remains a challenge in Illinois. According to the U.S. Census Bureau’s Building Permits Survey, residential permitting in Illinois remained below pre-pandemic levels through 2024 and into 2025, indicating that new housing construction has not kept pace with population and demand. While increased supply could help ease home prices and improve affordability, current permitting trends suggest inventory constraints are likely to persist heading into 2026. 

Property Tax Rate 

The average property tax rate in Illinois according to Rocket Mortgage is 2.08%, making it the second highest in the country behind New Jersey with an average annual property tax of around $9,006.07. However, it is important to note that this statistic only represents the average of a very populous state comprised of both cities and prairies, and tax rates will vary depending on the value of a home and its location in the state. 

Foreclosure Rate in Q1 of 2025 

In the first quarter of 2025, Illinois recorded 6,355 foreclosure filings, or roughly 1 filing per 857 housing units, placing it 2nd nationwide according to ATTOM data. This represents a 48.7% increase quarter over quarter and a 15.8% increase year over year, confirming that Illinois continues to experience elevated foreclosure activity relative to many other states as we head toward 2026.

Hottest Local Markets in Illinois 

Here are a few of the top local housing markets in Illinois for 2024: 

1. Chicago Metro Area

As previously mentioned, Chicago is one of the most populous cities in the United States and the most populous city in Illinois. Its median housing price is significantly higher than the statewide average at $380,000 in October 2025. According to Redfin, Chicago’s median DOM is 56 days, signifying a less competitive buyer’s market in the city. Some of the most popular neighborhoods in Chicago include Near North Side, Lincoln Park, and West Town. 

2. Aurora

Aurora is the second most populated city in Illinois behind Chicago and is in the Northeastern part of the state. Its median housing price is also higher than the statewide average at $332,000. Significantly, it has seen a 10.7% increase in median price in the past year.  Its median DOM is 51 days, which similarly signifies a less competitive buyer’s market in the city. Some of the most popular neighborhoods in Aurora are Far Southeast, Edgelawn Randall, and South Farnsworth. 

3. Peoria

Peoria is a city in central Illinois located on the Illinois River. Its median housing price is considerably lower than the other two cities listed above at $151,000 in October 2025. This is a 7.9% increase from the previous year, though the city saw significantly higher prices in summer 2023. Its median DOM in October 2025, however, was 26 days, suggesting a much more competitive market than other cities and the statewide average. Some of the most popular neighborhoods in Peoria include North Florence, Charter Oak Village, and Rolling Acres.  

Economic Factors Impacting the Illinois Housing Market  

A holistic view of Illinois’ housing market requires a basic understanding of the main economic drivers affecting the market. Let’s look at a few critical ones below:  

Mortgage Rates 

Mortgage rates are a common cause of concern for would-be homeowners across the U.S. in 2024. According to Zillow, Illinois’ current average for 30-year fixed-rate mortgages is 5.99% in October 2025 which is significantly lower than the U.S. average of 6.54%. As previously mentioned in this article, this number is down from mortgage rates that approached 8% at the end of 2023, and experts expect that this number may continue to decrease throughout 2026.

Inflation and Cost of Living 

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Illinois. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income.  

Population Changes and Demographics 

A changing population can also have implications for the housing market. According to the U.S. Bureau of Labor Statistics, the unemployment rate in Illinois is one of the highest in the country at 4.4% as we head into 2026. This relatively high number could help to explain to some of the difficulties in the housing market such as the median DOM. 

Illinois Housing Market Forecast 2026 

As discussed earlier, Illinois’s housing market has continued moving toward greater balance through 2025. New listings increased compared to the tight conditions of 2022 and 2023, but overall supply remains below historical norms. Elevated days on market and easing mortgage rates have reduced seller leverage, making conditions more favorable for buyers than in recent years. Heading into 2026, Illinois remains closer to a buyer-leaning market, though competition persists in stronger metro areas.

Likelihood of Illinois Housing Market Crash

Though there is some contention, experts insist that a housing market crash in Illinois is unlikely for 2026, thanks largely to the rapid growth of Chicago in recent years and the relative affordability of the cost of living in certain areas in the state. The increasingly stabilized mortgage rates in the state continue to stay over 6%, but the market seems poised to continue favoring the buyer. 

Forecast for the U.S. Housing Market 

Now that we’ve looked at Illinois’ housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years?

The United States' current median existing-home sale price is around $415,200 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 3 months, keeping conditions constrained.

We’re currently in a seller’s market with buyers looking at continued rising house prices—although they are rising at a slower pace compared to previous years.. The same trend can be seen with renters. Housing continues to appreciate, in general.

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In 2026, he predicts that existing home sales will rise an additional 13%. Yun expects mortgage rates to stabilize at the lower end of the current 6-7% range through 2025 and 2026 as the Federal Reserve continues gradual rate cuts. There's an anticipation of a more balanced market in the coming years, with moderate price growth and a greater amount of Americans re-entering the market.

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth.

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Year-to-date single-family housing starts were down about 7.1% in 2025, whereas starts for buildings with five or more units were up roughly 14.5% Higher mortgage rates and inflation (affecting price of materials) were the main causes.

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. According to the National Association of Home Builders, approximately 74.9% of U.S. households were unable to afford a newly built median-priced home in 2025. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.

Illinois Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rental affordability remains a major issue heading into 2026. According to the Joint Center for Housing Studies of Harvard University, more than 22 million renter households nationwide remain cost-burdened, meaning they spend over 30% of their income on rent and utilities. While rent growth slowed from its 2022 peak, affordability has not meaningfully recovered.

Rental markets cooled after 2023 as new units came online and demand softened, but the core problem persists. Rent increases continue to outpace income growth in many regions, leaving a large share of renters financially strained as we move into 2026.

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year.  

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.

This short summary leads directly into Illinois’ current rental market. Below are just a few of the current trends for Illinois’ rental market based on data pulled from Zillow: 

Illinois Rental Market Key Trends

• Median rent: $1,800 

• Month-over-month rent charge: $0 

• Year-over-year rent charge: +$100

• Available rentals: 18,593

Conclusion

Illinois’s housing market reflects a wide mix of urban and rural conditions, which continues to create uneven outcomes across the state. Heading into 2026, the market shows signs of gradual stabilization, with improving affordability and moderating prices in some regions. Investors and buyers alike are watching closely as interest rates, inventory levels, and new construction trends shape Illinois’s next phase.

FAQs

Is Illinois a buyer’s or seller’s market in 2026?

Illinois leans closer to a buyer’s market heading into 2026, especially outside major metros. Longer days on market and more negotiating room favor buyers, though competition remains strong in Chicago and select suburbs.

Are home prices in Illinois expected to fall?

A broad price drop is unlikely. Instead, price growth is expected to slow, with some markets stabilizing while others continue to see modest appreciation.

Why are Illinois property taxes so high?

Illinois relies heavily on property taxes to fund local services, and rates vary widely by county. While the state’s average rate is among the highest nationally, the actual tax burden depends on location and assessed value.

How do mortgage rates affect the Illinois housing market?

Lower mortgage rates compared to late 2023 have helped stabilize demand, but rates above 6% still limit affordability. Gradual rate easing in 2026 may bring more buyers back, particularly first-time purchasers.

Is Illinois a good state for real estate investors in 2026?

Yes—but selectively. Stable pricing, higher rental demand, and elevated foreclosure activity may present opportunities, especially in affordable metros and rental-heavy markets like Peoria and parts of Chicago.