Hi everyone, here is the housing market update I publish for clients each month. As always, there are some interesting surprises! This is data for the Chicagoland metro area sourced from Midwest Real Estate Data LLC.

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Housing Affordability - down slightly

- The NAR nationwide housing affordability index fell by 5 points from February to March, dipping back below 100. The median income earner can no longer buy a median-priced home and spend 25% of their income on the principal & interest. This was thanks to larger increases in home prices and mortgage rates than in household income.
- The Midwest region’s index fell 10 points 133, still by far the most affordable in the nation.

Supply (New Listings and Homes for Sale) – down drastically
- There were 25% fewer homes listed this May compared to last, by far the fewest new listings in any May on record, including 2020.
- Homes for sale reached a fourth consecutive new all-time record low, down over 30% from last May.
- The only other time inventory has shrunk during spring was in 2020.

Demand (Pending Contracts and Closed Sales) – down significantly
- Pending contracts are down 15% and closed sales down almost 23% compared to last year.
- Demand is softer than at virtually any time in the past 10 years, but supply is still down more.

Supply/Demand Relationship – stable, seller’s market in MOST locations*
- Months supply still stands at 1.8 months, virtually unchanged since November 2021.
- Median days to contract stand at 10, steady in the range of 8-10 since July 2021.

Prices – flat
- Seasonally adjusted prices have remained flat for 10 months since August 2022, while prices vs the same month prior year were back to flat after being down by single digits for the last 5 months.

Mortgage rates – within “normal” range
- Today's (6/5/23) 30yr fixed averages 6.89%, a half-point higher than a month ago and towards the higher end of the range of the last 9 months. FHA/VA loans trending a hair above 6.5%. There is no discount for a 5/1 ARM, and a .60 discount for a 15yr fixed.
- The Federal Reserve meets next on June 13-14 and is expected to keep the overnight borrowing rate unchanged for the first time since early 2022. That should be the new norm as long as inflation and labor market tightness continue to ease.

What to do?
- Sellers: Short market times and ample demand are very real but prices are flat as a pancake. Price, prep and stage aggressively as you do need to compete on price.
- Buyers: Compete on all aspects (price, if you can, and terms), as multiple offer situations are back in style this spring with inventory woes only growing. Work with an agent who can help identify inventory prior to it hitting the market and/or work through alternative sale channels.