Chicago-area home prices continued to rise in October, even as national asking prices fell and higher mortgage rates put pressure on buyers. New reports from Redfin and the National Association of Home Builders (NAHB) show a housing market facing affordability challenges, with conditions varying across the country.

The median sale price in the Chicago metro area rose 5.2% year over year during the four weeks ending Oct. 11, according to Redfin. Nationally, median sale prices increased just 0.5%, while the median asking price fell 0.3%. It was the first annual decline in asking prices since March.

Separately, Redfin’s September data showed Chicago among the markets with the strongest year-over-year price growth. Prices rose 10.3% from a year earlier, the third-largest increase among the markets tracked. On a month-over-month basis, prices increased 1%.

Higher costs also continued to weigh on sales. Pending home sales during the week ending Oct. 11 ell 12.7% year over year nationwide, despite a 1.5% increase from the previous week. Pending sales also declined across all 50 of the most populous metro areas tracked by Redfin. 

Sellers are making adjustments, too. Twenty-two percent of active listings had a price reduction, up from 20.9% a year earlier. That was the highest share in Redfin’s records.

According to the Mortgage Bankers Association (MBA), the average 30-year fixed mortgage rate rose to 7.49% in the week ending Oct. 2, up from 7.30% the previous week. The increase came as mortgage application volume fell 4.2% week over week. Purchase applications declined 2%, while refinancing applications dropped 8%.

Redfin reported that the median monthly mortgage payment during its reported cycle was $2,777, the highest level on record.

Prices may be rising more slowly nationwide, but high mortgage rates and monthly payments are still keeping homeownership out of reach for many buyers.

Builder confidence hits a 14-year low

Homebuilders are facing similar challenges. NAHB’s Housing Market Index fell three points in October to 29, its lowest reading since June 2012. The index tracks builders’ views of current sales conditions, expected sales over the next six months and prospective buyer traffic. Readings below 50 indicate that more builders view conditions as poor than good.

“Housing remains squeezed by supply-side constraints and significant affordability challenges,” said NAHB Chief Economist Robert Dietz. “Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines. As a result, buyer traffic has fallen to its lowest level since April 2012, excluding the pandemic’s onset in April 2020.”

Builders are offering more incentives to attract buyers and keep sales moving. In October, 65% reported offering sales incentives, marking the 19th consecutive month in which at least 60% did so. 

Price cuts were also common. Forty-three percent of builders reported reducing prices, the highest share recorded from 2020 through 2026. The average reduction held at 6% for the seventh straight month.

High mortgage rates and construction costs continue to make it harder for builders to attract buyers. Some are offering price cuts and other incentives to close deals, but those efforts haven’t been enough to boost confidence in the housing market.

Midwest construction holds up

The Midwest offered a somewhat brighter picture in NAHB’s regional data, although builder confidence still declined. The region’s three-month moving average for builder sentiment fell three points to 40 in October. That was higher than the South’s reading of 30 and the West’s 26.

Single-family building permits in the Midwest also increased 2.9%, and the NAHB called the region a “relatively bright spot” for single-family home building. 

The data shows some clear differences between regional and national trends. While builders are reporting weaker confidence and fewer prospective buyers, the Midwest’s permit growth suggests that planned home construction has not stalled across the region. Still, permits don’t guarantee a project will get built, or that buyers will be able to afford the homes.

Chicago-area home prices are still rising, but affordability remains a concern nationwide, and builders are growing less confident about the market heading into the end of the year.