By Don DeBat

28-Nov-24 – Benchmark 30-year-fixed home loan interest rates were down just 0.03 percent on November 27 to 6.81 percent, after inching up on November 21 to an average of 6.84 percent from 6.78 percent a week earlier, according to Freddie Mac’s Primary Mortgage Market Survey.

A year ago, 30-year-fixed loans averaged an unaffordable 7.22 percent.

“Mortgage rates ticked back up...continuing to approach 7 percent,” said Sam Khater, Freddie Mac’s Chief Economist. “Heading into the holidays, purchase demand remains in the doldrums. While for-sale inventory is increasing modestly, the elevated interest rate environment has caused new construction to soften.”

While the Federal Reserve recently cut interest rates, home loan rates have risen in recent weeks. However, another 25 basis-point reduction in the federal funds rate is expected in early December.

Despite increasing mortgage rates and local and national political turmoil, the real estate market gained momentum in October in the Lakeview, Lincoln Park, Near North, and North Center neighborhoods.

“The six comparatives in this report show many areas of positive growth. However, inventory fatigue continues to be a serious problem,” noted John Irwin, co-author of the North Side Market Analysis with Jackie Lafferty of Baird & Warner.

For the first time since April, home sales had a strong increase. In October 2024, home sales were up 9.9 percent from October 2023. Three of the four neighborhoods reported increases, and North Center reported the only decrease.

Three of the four neighborhood price points have increased over 2023. Homes priced from $1 million to $2 million reported flat sales compared to last year.

Home sales are now up 1.4 percent year-to-date verses 2023. Homes that went under contract in October 2024 rose 19.1 percent over the same month a year ago.

“It should be noted that the homes that went under contract in October will probably close in November, giving us a positive indicator of next month’s home sales,” said Irwin (left).

Home prices rising

In October 2024, home prices rose 7.2 percent over the same month in 2023. Three of the four neighborhoods reported increases and only Lincoln Park decreased by 6.8 percent. The 2024 year-to-date median prices are up 6.5 percent compared with October 2023.

With record low inventories, home prices are expected to spike. However, Chicago home prices have remained relatively low for the past few years.

“As the market begins to improve, we will continue to see multiple offers and rising home prices until inventory levels can begin to catch up to demand,” predicted Irwin. “During the holidays, the market traditionally begins to slow down. However, 2024 has been anything but a traditional year. There are still a lot of variables that will come into play, so fasten your seat belt and let’s see where the market takes us.”