The Illinois housing market is continuing to cool off from the pandemic housing boom, with the number of home sales still down significantly while prices are holding steady compared with the first quarter of last year, housing experts say.

Yet, for both the Chicago metro area and Illinois as a whole, prices and sales began increasing month-over-month in February and continued the trend in March, according to Illinois Realtors, a trade association for real estate agents.

Illinois Realtors found that as of March, the median price of a home in the city of Chicago was $334,000, up from $312,500 in February. It was $310,000 for the Chicago metro area and $259,000 statewide in March, and $290,000 and $240,000, respectively, in February.

The housing market began its seasonal rebound in February this year, which is earlier than is typical, and home sales and median sale prices are expected to continue to increase as spring moves along, according to housing experts. Spring is typically a time when the number of real estate transactions starts to pick up again after the slower winter months.

“Our forecast is for prices to appreciate through July, but at a lower rate than last year. We expect the number of sales to grow at a faster rate over the next quarter than last year’s rate,” said Daniel McMillen, head of the department of real estate at the University of Illinois at Chicago, in a statement.

Trends coming out of the Chicagoland suburbs are similar to and different from those in Chicago and Illinois. Sales of homes in first quarter 2023 were down significantly compared with the same period last year, with sellers hesitant to list their homes for sale because it would mean trading their low mortgage rates for higher ones, according to Mainstreet Organization of Realtors, a membership association for realtors in DuPage, Lake, and western and southern suburban Cook County. Many sellers are unwilling to trade their low mortgage rates for higher ones, helping to create a severe inventory shortage.

Median sale prices for single-family homes in the Chicagoland suburbs increased 0.6% in March, the first year-over-year increase this year, while median sale prices for attached homes, such as condos and townhomes, remained elevated throughout the first quarter of this year compared with last year, ranging from monthly increases of around 7% to 12%.

The discrepancies in home sale price increases between single-family homes and attached homes can mainly be attributed to two factors, according to Debbie Pawlowicz, president of Mainstreet Organization of Realtors.

Pawlowicz said the first reason is that attached homes tend to have lower price points, making homeownership attainable for most people, and the second reason is that baby boomers have surpassed millennials as the largest percentage of homebuyers nationwide this year, and baby boomers are attracted to attached homes.

Since 2019, there has been a nearly 40% drop in new listings in the Chicago metro area, with that number being closer to 51% when looking at overall property inventory levels since March of that year, according to Zillow.

Adding to the inventory challenges are issues stemming from mortgage rates that have been volatile and are higher than what they were in the first quarter of last year. Freddie Mac reported a five-week increase in the 30-year fixed-rate mortgage starting the second week of February, thanks to another interest rate hike from the Fed that month. While rates edged closer to 7%, they remained below last year’s 7.08% peak on Nov. 10. Mortgage rates started to come down again in March, and the 30-year fixed-rate averaged 6.39% on April 20, according to Freddie Mac.

Typical monthly mortgage payments in the Chicago metro area for homebuyers who purchased with a 5% down payment are still much higher this quarter year-over-year, with March data from Zillow showing a monthly payment of $1,888, an around 2% month-over-month decrease and a 22% year-over-year increase. If a homebuyer makes a 20% down payment, the monthly mortgage payment goes down to $1,436, a roughly 23% increase from a year ago in March, according to Zillow. Zillow month-over-month data shows that monthly mortgage payments have been trending downward since November, with the exception of the month of February given the spike in mortgage rates then.

U.S. foreclosure activity continued to climb in quarter one of this year, with foreclosure starts for U.S. properties up 29% from a year ago, according to ATTOM, a national property data provider. The same data shows that Illinois had the fifth most foreclosure starts in the country at 4,006, and Chicago had the second most foreclosure starts of major metro areas with populations over 200,000 at 3,549. In Chicago and Illinois, as well as nationally, the number of properties starting the foreclosure process is still below pre-pandemic levels.

“Despite efforts made by government agencies and policy makers to try and reduce foreclosure rates, we are seeing an upward trend in foreclosure activity,” Rob Barber, chief executive officer at ATTOM, said in a statement. “This unfortunate trend can be attributed to a variety of factors, such as rising unemployment rates, foreclosure filings making their way through the pipeline after two years of government intervention, and other ongoing economic challenges. However, with many homeowners still having significant home equity, that may help in keeping increased levels of foreclosure activity at bay.”

And while the future of mortgage rates still hangs in the balance as the Fed weighs further interest rate hikes, and inventory remains at historically low levels, more want-to-be homebuyers may be jumping in, housing experts say.

“While we continue to see a decline in closed sales that matches the decline in inventory, those who were on the fence during the hectic pandemic market are finding opportunities to enter the market with positive hope,” said Sarah Ware, president of the Chicago Association of Realtors, in a statement.