Home prices in the Chicago metro area have witnessed a remarkable upswing, with a 9.6% increase in August 2023 compared to the same time in 2022. According to data released by Illinois Realtors, the median sales price in the area now stands at $339,000, a notable $29,000 jump from August 2022. This surge in Chicago's housing prices starkly contrasts the national average of 3.9%, as reported by the National Association of Realtors.

Interestingly, the situation was the opposite merely a year ago — in August 2022, housing prices in the United States saw a 7.7% growth compared to the modest 3.3% rise in the Chicago area. The swing in the market is fueled by the continuing dearth of homes for sale, driven largely by homeowners holding onto their properties with lower mortgage rates and being reluctant to buy a new house with significantly higher mortgage rates, hovering around 7%.

While the prices observed a month-to-month decline from July to August 2023 in both Chicago and Illinois, they still sit considerably higher than the previous year. Daniel McMillen, head of the department of real estate at the University of Illinois at Chicago, said in a news release, “Our forecasts indicate that prices will continue to their usual seasonal decline over the next three months, while remaining higher than this time last year.”

The number of homes sold in the Chicago metro area in August 2023 was recorded at 9,103, a decrease from 10,728 during the same month in 2022. The decline in sales is attributed to the inventory shortage, which has taken a toll on recent sales volumes. In fact, another report from Crain's Chicago Business stated that 15.1% fewer homes were sold in the Chicago metro area in August 2023 compared to the same period in 2022, causing the lowest total number of homes sold in August since 2011.

The growing gap in housing prices between the national average and that seen in the Chicago area can be traced back to the boom in property prices. Many regions inflated massively, while Chicago, having underperformed, witnessed a much smaller rise. With the fizzling of this boom, the city now outpaces the nation's growth rate in housing prices, as reported by Crain's Chicago Business.

Lawrence Yun, NAR's chief economist, stated in the national report that the supply would need to essentially double to moderate the upward spiral of home prices. However, despite the swift growth in Chicago-area prices, the real estate market in the city is yet to stabilize. Summer is typically a busy period for the housing market, and while the last few months have been busier than those earlier in the year, they have not been as hectic as in previous years due to high mortgage rates and a lack of houses for sale, as sellers hold on to low-interest mortgages.