Chicago Housing Market Faces Affordability Challenges in 2026

The Chicago housing market is experiencing a unique surge in activity as 2026 begins, with Grigory Pekarsky, co-owner of Vesta Preferred Realty, reporting more home sales in January than many agents see in a year. In 2025, home sales in the greater Chicago area increased by 0.6% year-over-year, totaling nearly 89,100 homes sold. However, despite this uptick, the region faces significant challenges, particularly in terms of housing affordability and inventory shortages. The median sale price for homes in Chicago rose over 5% last year to $375,000, reflecting a 45% increase from 2019.

Affordability — or the lack of it — will define Chicago's housing market this year, experts say

The affordability crisis in Chicago is exacerbated by a dwindling number of listings and strong buyer demand, leading to increased competition and rising prices. Experts predict that while some improvements may occur, affordability will remain a critical issue throughout 2026. Jeff Baker, CEO of Illinois Realtors, emphasized that housing stability and affordability are interconnected with broader economic factors, affecting everything from economic development to public safety.

Affordability — or the lack of it — will define Chicago's housing market this year, experts say

In response to these challenges, President Donald Trump signed an executive order on January 20, 2026, aimed at blocking private equity and institutional investors from purchasing single-family homes, a move intended to enhance homebuying accessibility. Additionally, the city of Chicago has initiated the Missing Middle Infill Housing initiative, which aims to increase the availability of market-rate homes that have become scarce due to historical disinvestment.

Affordability — or the lack of it — will define Chicago's housing market this year, experts say

The Midwest, including Chicago, has not seen the same construction boom as other regions, leading to significant inventory issues. According to research from Resiclub, Illinois has experienced a 58% decline in homes for sale since December 2019, while home prices surged by 43% from March 2020 to November 2025. Daryl Fairweather, chief economist at Redfin, noted that while demand remains strong in Chicago, it is even stronger in surrounding areas, prompting some residents to relocate.

Affordability — or the lack of it — will define Chicago's housing market this year, experts say

Looking ahead, Fairweather predicts that Chicago may outpace national trends in price growth due to its relative affordability and supply constraints. A potential drop in mortgage rates could also enhance buyer purchasing power and stimulate market activity. Currently, nearly 69% of U.S. homes with outstanding mortgages have fixed rates of 5% or lower, which may hinder mobility for current homeowners looking to sell.

Affordability — or the lack of it — will define Chicago's housing market this year, experts say

Despite some positive indicators, housing experts caution that the market remains tight, particularly for first-time homebuyers who often struggle against cash offers. Marquetta Jackson, a HUD-certified housing counselor at YWCA Metropolitan Chicago, highlighted the importance of preparedness for potential buyers, emphasizing that there is no perfect time to buy, only a prepared buyer.

Affordability — or the lack of it — will define Chicago's housing market this year, experts say

As the Chicago housing market navigates these complexities, prospective buyers are encouraged to consider alternative housing options, such as townhomes or duplexes, which may offer more affordable entry points. Patience and preparation will be essential for those looking to enter this challenging market.

Affordability — or the lack of it — will define Chicago's housing market this year, experts say