Real Estate Activity in Illinois: June 2025

Real Estate Absorption Activity in Illinois: June 2025

Absorption in real estate refers to the pace at which available properties are being sold or leased within a market during a specific period. It's a key indicator of market demand and helps determine whether it's a buyer's or seller's market. 

Current Trends in Illinois (based on available data for May 2025):

• Statewide: Home sales in Illinois experienced a decrease in May 2025 compared to the previous year, while both median prices and inventory increased. Statewide sales were down 4.7%, and Chicago metro and City of Chicago saw similar decreases.

• Chicago Multifamily Market: The multifamily market in Chicago remains strong with robust demand, as evidenced by the absorption of approximately 6,700 units over the past 12 months. The Downtown and North Lakefront submarkets are particularly active.

• Home Sales: Statewide home sales (including single-family homes and condominiums) in May 2025 were down 4.7% compared to May 2024, with 12,674 homes sold compared to 13,300 in the previous year.

• Inventory: The number of homes available for sale statewide increased in April and May 2025 compared to the previous year. In April 2025, statewide inventory was up 4.2%.

• Pricing: Median home prices in Illinois continue to rise. The median price in April 2025 was $310,000, a 6.2% increase from April 2024. 

Factors Influencing Absorption Rates in Illinois:

• Mortgage Interest Rates: High mortgage rates have been cited as a primary reason for the subdued sales activity nationally. This is likely influencing the Illinois market as well.

• Inventory Levels: Although inventory has increased recently, it has generally been at historically low levels in Illinois. This limited supply can contribute to higher prices despite decreased sales.

• Regional Differences: Demand and rental prices vary across different regions of Illinois. Urban centers tend to have higher demand and price increases, while some suburban areas show increased interest due to factors like remote work. 

How Absorption Rate Affects the Market:

• Seller's Market (Absorption Rate ≥ 20%): High demand and limited inventory lead to increased competition among buyers, driving prices up and shortening the time it takes to sell a home.

• Buyer's Market (Absorption Rate ≤ 15%): Lower demand and higher inventory give buyers more choices, potentially leading to lower prices and longer selling times.

• Neutral Market (Absorption Rate between 15% and 20%): A balanced market where supply and demand are relatively equal. 

In summary, while recent data suggests a slight cooling in Illinois home sales, potentially due to factors like high mortgage rates, the Chicago multifamily market remains strong, and overall prices continue to appreciate. Understanding absorption rates is crucial for both buyers and sellers to navigate the market effectively. The specific absorption rate for a particular property or area will depend on factors like location, price range, and property type.