Housing Research Digest: Week of October 26, 2026
The research this week points in two directions at once. Nationally, the mortgage slump is deepening after rates climbed to 7.61% in early October, and builders are cutting prices and adding incentives to keep sales moving. In the Chicago area, the September numbers showed fewer sales and fewer homes for sale, but a higher median sale price. That gap is the most useful part of this week's reading for anyone in Aurora, Naperville, Batavia, Geneva, St. Charles or the nearby towns.
Rates are back near 7.5%, and the buying signals are weak
Lance Lambert of ResiClub reports that the 30-year fixed mortgage rate bottomed at 5.99% in February, rose to 7.61% on October 5, and eased to 7.35% by October 28, according to Mortgage News Daily data. The Mortgage Bankers Association's purchase application index fell to 134.1 for the week ending October 23, which he describes as near fall 2023 levels.
What this means here: the purchase numbers tell us more about our local market than the refinance numbers do. Chicago metro figures for September, as reported by Illinois REALTORS and passed along in a loan officer's newsletter, show closed sales down 3.5% and homes available down 8.4% from a year earlier. The median sale price rose 6.9% to $385,000. I have not yet checked those three Chicago figures against the Illinois REALTORS report itself, so treat them as reported.
Not everyone agrees on where rates go next. ResiClub's view is that most economic models do not expect rates to drop more than about 1.5 percentage points unless the economy weakens sharply. The Federal Reserve held rates steady at its October 28 meeting, with two members voting for a hike. That leans the debate toward higher rates, not lower.
Builders are paying for volume
KB Home reported an average selling price of $473,000 in the third quarter, down 0.6% from a year earlier and 7.0% below its late-2022 peak. It lowered its fourth-quarter price outlook by about $20,000, mostly because of slower sales in Southern California, and its chairman said resale inventory is at its highest level in a decade. PulteGroup's sales incentives reached 10.4% of price in the third quarter, about $52,000 on a $500,000 home, compared with 2.2% in the third quarter of 2022.
These are national and Sun Belt numbers, so they do not describe local builders directly. They do show the direction of incentives. For new construction in Aurora, Sugar Grove, Yorkville or Oswego, it is worth comparing any builder offer against what that builder is paying to move homes.
KB Home argues its build-to-order model protects its margins, since about three-quarters of its third-quarter deliveries were homes built after a buyer signed. The critical reading is that its gross margin fell to 16.5% from 18.2% a year ago. Both things can be true, and builders report their own incentives, so the useful question is what each incentive is measured against.
The national average hides the local story
Invitation Homes, a large single-family landlord, reported that accidental landlords (homeowners who could not sell and listed their homes as rentals) are most common in Denver, Houston, Austin, San Antonio and Portland. They are least common in Boston, Providence, New York, Hartford and Buffalo. Chicago is not on either list. A ResiClub analysis found that metros with bigger price drops from the 2022 peak tend to have more accidental landlords.
Chicago's September median rising while sales and inventory fell looks like the Midwest pattern, not the Sun Belt one. On this evidence, the forced-rental pattern is not a driver in our area. The sources also disagree on whether prices are falling. Lance Lambert says pricing is starting to decline in more markets, while the Chicago figures show a higher median. Both can be true, because a median reflects which homes sold, and the declines sit in specific metros.
Rentals are softening where supply is high
Invitation Homes reported that renewal rents rose 4.3% in the third quarter while new-lease rents fell 0.2%. The weakest new-lease results were in Phoenix, South Florida, Tampa and Las Vegas. The company says leasing a home was more than $1,000 a month cheaper than owning one in its markets. That is the company's own comparison, and it has a stake in it. The Sun Belt pressure it describes is much less present in the Fox Valley.
Mortgage lenders are consolidating
The Truth About Mortgage tracker lists lender closures, layoffs and mergers through October. One item is eXp World Holdings and Kind Lending closing Success Lending, with 121 layoffs in September. Fewer lenders can mean fewer loan officers available to buyers in a slow year, which is worth knowing if you are planning a purchase in the next few months.
What we are watching next
ResiDay in New York on November 6 features KB Home's new chief executive, and ResiClub says it will ask about builder pricing. Freddie Mac's weekly rate survey comes out each Thursday, and the MBA purchase index comes out each Wednesday. Those reports will show whether the purchase slowdown holds. The Aurora Fair Housing webinar for housing providers is on November 5.
Dave Richert, Richert Family Team, eXp Realty. If you are weighing a move in Aurora, Naperville, Batavia, Geneva, St. Charles or a nearby town, I am happy to talk through what these numbers mean for your situation.