U.S. Home Sales Hit a 16-Year Low

U.S. Home Sales Hit a 16-Year Low - What It Means for Buyers & Sellers in Chicago

June 2025 | Chicago Real Estate Market Update

This spring, U.S. home sales reached their lowest level in 16 years, marking a major turning point in the real estate cycle. According to the National Association of Realtors, May 2025 existing-home sales came in at just 4.03 million annualized units, hovering near lows not seen since 2009 -or even 1995, depending on the data set.

But this isn’t a housing crash. It’s a recalibration. And if you’re buying, selling, or investing in Chicago - especially in neighborhoods like West Town, Bucktown, and Lincoln Park - this moment is full of opportunity, if you know how to approach it.

Let’s break down what’s happening and how to navigate this evolving market.

The National Market Snapshot

The national housing market is slowing, not collapsing. Here’s where things stand as of mid-2025:

• Existing-home sales: 4.03 million in May 2025 (seasonally adjusted), slightly above April, but 30% below normal activity.

• Inventory: Rising modestly to 1.54 million homes, which equates to 4.6 months’ supply - up from 3.1 months in 2022.

• Home prices: National median hit a record $422,800, up 1.3% year-over-year.

• Days on market: The average home now takes 38 days to sell, up from 32 last year.

So why is this happening?

The Four Drivers Behind the Slowdown

1. Mortgage Rates Remain High

At 6.8-7%, mortgage rates are significantly higher than the 2.75-3.5% levels seen just two years ago. That spike has made monthly payments substantially more expensive for most buyers, leading to affordability challenges across the board.

2. The Affordability Squeeze

Since 2019, home prices have increased 52%, while household incomes have risen only 30%. This growing gap means fewer first-time buyers can enter the market without creative financing or major lifestyle adjustments.

3. The Lock-In Effect

Roughly 80% of U.S. homeowners have a mortgage rate below 4%. Understandably, they’re reluctant to sell and trade up into a higher rate, which has slowed new listings and reduced inventory turnover.

4. Builder Slowdown

Builders are scaling back. The NAHB confidence index has dropped to 32 - the lowest in two and a half years. To move homes, many developers are now offering:

• 5-6% rate buydowns

• Price cuts of 3-5%

• Free upgrades or closing cost credits

What This Means in Practice

For Buyers:

This is the most buyer-friendly environment since before the pandemic:

• More homes to choose from

• Sellers are open to negotiation (depending on the segment of the market)

• Price reductions becoming more common

However, affordability remains a challenge. Buyers should focus on:

• Getting pre-approved at multiple interest rate tiers

• Leveraging seller concessions

• Considering new construction with incentives

For Sellers:

It’s still a strong market - if you price and prep correctly.

• Expect longer days on market (35–45 days in many areas)

• Be prepared to offer concessions (closing costs, repairs, etc.)

• Presentation matters more than ever: professional photos, clean staging, and clear pricing are critical

For Builders & Investors:

This is a time for strategic adaptation:

• Smaller, more affordable units are moving faster

• Incentive packaging is essential

• Infill development in urban neighborhoods offers long-term upside

Chicago Focus: West Town, Bucktown & Lincoln Park

Let’s zoom in on how the slowdown is playing out locally:

West Town

A diverse, creative hub just northwest of downtown, West Town is seeing:

• Inventory up 15% year-over-year

• More flexibility in pricing, especially on multi-units and townhomes

• Favorable conditions for buyers looking for value in Wicker Park, Noble Square, or East Humboldt

Pro tip: Many sellers here are motivated but not desperate. Bring strong offers with clean terms, and you’ll stand out.

Bucktown

Trendy and family-friendly, Bucktown remains in demand - but it's a more balanced market:

• DOM increasing on listings over $1M

• Condos near the 606 Trail need accurate market pricing to move quickly

• Good opportunity for buyers who lost out in 2021 bidding wars

Investor watch: Well-maintained 2–4 flats are performing well thanks to stable rental demand.

Lincoln Park

Still a gold standard for schools, green space, and historic charm. But the pace has cooled:

• Strong under $800K, slower over $1.5M

• Flat price growth YTD - but no major drops

• Upsizers and move-down buyers can finally act without overpaying

Seller advice: If your home is move-in ready and priced right, you’ll still sell fast.

The Outlook: What’s Next?

Most economists predict a gradual market rebound in late 2025 or early 2026, assuming interest rates ease to 6% or lower. Price growth will likely remain modest or flat until affordability improves.

Expect to see:

• More listings hitting the market in fall 2025

• Continued buyer incentives from builders and private sellers

• Chicago’s core neighborhoods outperforming national averages

Final Thoughts & Advice

This isn’t 2008. There’s no bubble to burst. What we’re experiencing is a necessary rebalancing.

If you're buying, you finally have time and room to negotiate.
If you're selling, there's still strong demand - but only for homes that are presented and priced strategically.

📍In neighborhoods like West Town, Bucktown, and Lincoln Park, the market is moving, just more thoughtfully.

Ready to Talk Strategy?

Whether you’re looking to buy your first condo, sell your family home, or reposition an investment property, we are here to help you make sense of the numbers - and the neighborhood dynamics behind them.

Let’s sit down, map out your goals, and move with confidence.

📞 Contact us today to book your one-on-one market consultation.