What buyers and sellers should know
By Megan Sullivan, Chicago Real Estate Broker with Compass
October 12, 2026
Higher mortgage rates are slowing buyer activity nationally, while limited housing inventory continues to support Chicago home prices. That creates a market with opportunities for buyers who can comfortably afford today’s payments and sellers who get their pricing right. There is still plenty we can do to make a move work, even if interest rates are being a little uncooperative.
I listened to Mike Simonsen, Compass’s chief economist, discuss the market on October 12. One observation stuck with me: people wanted to wait when rates were falling, and they want to wait now that rates have risen. I understand the hesitation. Buying or selling a home is a big decision, and nobody wants to get the timing wrong. But it helps to be specific about what we’re waiting for.
Mortgage rates have changed the math
Freddie Mac’s October 8 report put the national average for a 30-year fixed mortgage at 7.40%. Your own rate will depend on your credit, down payment, loan type and lender, but that average helps explain why buyers are taking a closer look at their budgets.
For perspective, a $400,000 loan over 30 years at 7.40% carries about $2,770 a month in principal and interest. At an illustrative 6%, that would be about $2,398. That’s roughly $370 a month, before taxes, insurance, assessments or mortgage insurance. These are examples, not loan quotes, but they show why the monthly payment needs to come before the kitchen wish list.
Waiting for lower rates comes with a tradeoff
As Mike explained, lower rates can bring more buyers off the sidelines. A better mortgage payment may come with more competition for the homes you like. Higher rates can slow demand and give buyers more room to negotiate, although that depends on the property and its local competition.
Waiting can absolutely make sense if you need to build savings, sort out your timeline or find a home that meets your needs. Waiting for a specific rate to arrive by a specific month is a prediction, and I would be careful about building a major financial decision around it.
If you’re wondering whether to buy a home in Chicago now or wait, let’s start with a comfortable monthly payment and the choices available in your price range. A future refinance may help if rates fall and you qualify, but the home should work financially at the payment you’re committing to today.
Chicago home prices still reflect limited inventory
National headlines need some local context. Illinois REALTORS’ August 2026 report for the city of Chicago, the latest monthly city report available when I wrote this update, showed 3,541 homes for sale, down 23.3% from August 2025. The median sale price was $405,000, up 8%, while closed sales were down 2.7%.
My read is that slower activity and limited supply can coexist. Buyers may have negotiating opportunities, but assuming every Chicago seller is ready for a large discount could mean missing a home that is priced well.
Those citywide numbers also don’t mean your particular home gained 8% in value. The mix of homes sold affects the median. A Lakeview condo with substantial assessments and a Roscoe Village single-family home need their own analysis, including comparable sales, condition and competing listings.
Buyers can negotiate more than the purchase price
Where a seller has flexibility, a closing cost credit can help preserve a buyer’s cash for moving, repairs or reserves. A price reduction helps in a different way by lowering the purchase price and potentially the amount borrowed. I want buyers to see both options in actual dollars before deciding which one serves them best. The lender needs to confirm the credit is permitted and usable.
Mortgage rate buydowns are another option to compare. A permanent buydown uses upfront discount points to lower the rate for that loan. Ask the lender how much it costs and how long the payment savings take to recover that cost, especially if you might sell or refinance sooner.
A temporary buydown subsidizes the early payments, then the buyer pays the full amount. You need to be comfortable with that later payment. For loans following Fannie Mae’s temporary buydown guidelines, qualification is based on the full note rate. A lower introductory payment should never be the thing making an otherwise unaffordable home feel affordable.
Why I test the price before a full public launch
For sellers, limited inventory is encouraging. Buyers are still doing the math, though, and a home needs to make sense against the other choices they can afford.
I don’t put a property on the full public market without testing the price first. I want us to go into that launch with as much market knowledge as possible, with the goal of maximizing the sale price while limiting days on market.
That starts with comparable sales and current competition. With the seller’s authorization, I use Compass’s phased marketing approach to gather early feedback through a Private Exclusive, expand exposure through Coming Soon and prepare for the full MLS launch.
I look at serious inquiries, showing feedback and buyer demand alongside the comparable properties. Are people interested at this price? Are they choosing another home, and why? Does the presentation make the home’s value clear? We use what we learn to refine the price and marketing before the broader launch.
The early audience is smaller than the full public market, so its feedback is one part of the evidence. We agree on a testing window and launch plan, and I weigh that feedback against the wider market. Testing doesn’t guarantee a particular price or a quick sale, but it gives us more information to work with.
A strong public debut matters because buyers notice how long a home has been available and how often its price has changed. I want the price and presentation to earn their attention when the listing is fresh.
If you’re considering a spring sale, we can begin the valuation and preparation now. Paint, repairs and good decisions rarely get easier when everyone is trying to finish them the week before photos.
Make a plan around the home and your numbers
There are reasons to feel encouraged. Buyers may be able to negotiate terms that make a real difference to their cash or payment. Sellers have limited competition in parts of Chicago, and thoughtful preparation can help their home stand out.
If you’re thinking about buying or selling, send me the neighborhood you’re considering or the address of your home. I’ll help you understand the comparable properties, your costs and the options that fit your timing. We can make a useful plan without asking you to develop a new hobby watching mortgage rates.
Megan Sullivan is a Chicago real estate broker with Compass, serving buyers and sellers across the North Side, including Lincoln Park, Lakeview, North Center, Roscoe Village, Lincoln Square and Ravenswood. She is a Certified Divorce Real Estate Expert and founder of The Divorce Collab.
