There are fewer homes on the market in Illinois right now than at any other time in recent history.

In fact, statewide inventory sunk to a new low this spring with just over 17,000 homes for sale in the entire state of Illinois. Five years ago, there were more than 50,000 homes on the market and 10 years ago, inventory topped 60,000.

Homeownership is still the dream for many, but when there aren’t enough homes on the market, it means fewer opportunities for people to buy their first home or to sell and move up to their next.

In fact, a lack of inventory is one of the biggest issues facing the housing industry, not just in Illinois, but around the country.

“Affordability challenges certainly remain and continue to hold back contract signings, but a sizeable increase in housing inventory will be critical to get more Americans moving,” said National Association of REALTORS® (NAR) Chief Economist Lawrence Yun in NAR’s latest Pending Home Sales Report

In a recent Illinois REALTORS® survey, members said the lack of inventory in the housing market is the biggest challenge to their real estate businesses right now.

Inventory, rising interest rates and economic uncertainty have replaced non-MLS marketing portals, regulations and property values as the top concerns for Illinois REALTORS®.

The record low inventory in Illinois is likely being caused by a number of factors, including rising mortgage interest rates and a scarcity of new home construction, says Dr. Daniel McMillen, head of the Stuart Handler Department of Real Estate at the University of Illinois at Chicago. McMillen and his team create the monthly MarketStats forecasts for Illinois REALTORS®.

Interest rates have more than doubled since 2021, when it wasn’t uncommon for homebuyers to lock in a 30-year mortgage rate under 3 percent. Now rates have been averaging at least 6.5 percent, according to Freddie Mac.

The trend of rising interest rates doesn’t seem to be going away, McMillen says.

Traditionally, higher rates mean consumers have less buying power when they do go to buy a home. And after so many existing homeowners locked in low rates in recent years, many may be reluctant to give those up by selling and paying more if they were to move, according to McMillen. If mortgage rates were to dip back under 6 percent, that could help loosen up some inventory, he says.

Another factor in low inventory: new home construction is lagging behind demand and the issue has been even more pronounced in Illinois, McMillen says. New construction isn’t keeping pace.

A March 2023 report from realtor.com estimated the shortfall between single-family home construction and household formations has grown to 6.5 million homes due to a decade of under-building. Including multi-family home construction reduces the gap to 2.3 million homes.

A similar report from NAR and realtor.com in June found that the low inventory crisis is particularly acute in available properties in the up to $256,000 price point. The U.S. market is short about 320,000 homes for middle-income buyers, according to the report.

Your local market knowledge can be combined with repeatable strategies to help consumers find the new homes they need. Listen as Ginger Sreenan, P.J. Trautman and Jean Lewis talk about the differences and similarities of serving consumers in one end of the state to another.

Illinois REALTORS® are looking at a variety of ways to help tackle the low inventory issue from advocating for changes in public policy to taking the message of homeownership and the value of REALTORS directly to consumers.

Earlier this year, Illinois REALTORS® penned legislation for state lawmakers to consider that aimed to boost workforce housing, improve housing stability and spur more housing construction in Illinois.

The proposal had four components including: reconfiguring the Illinois Home Buyers Savings Account Act to make it easier to navigate, preventing local governments from prohibiting Accessory Dwelling Units (ADUs), bringing fairness and uniformity to municipal impact fees and incentivizing workforce housing around the state’s electric vehicle-oriented manufacturing facilities. Discussions are expected to continue on the proposal in Springfield and Illinois REALTORS® will continue to advocate for improvements.

At the same time, Illinois REALTORS® followed up its “Everyone deserves the American Dream-REALTORS® are the key to homeownership” campaign with its first-ever consumer advertising campaign, “Your American Dream,” in April.

The statewide consumer campaign empowers members to share the value REALTORS® bring to the home buying and selling process, particularly now when low inventory is an issue.

Consumers have been seeing the Illinois REALTORS® ads on television, billboards, social media and streaming television and music services. Now, Illinois REALTORS® has created a toolkit to make it easier than ever for you to share the campaign resources to build your brand and your business during this summer selling season.

The new toolkit features a variety of updated resources, such as “6 Reasons Why Now is a Good Time to Sell” and “Homeownership: How Much Can I Afford?” that you can download and use in your discussions or share directly with your clients.

Check the toolkit frequently as new and updated resources will be added every week this month and through the remainder of the summer buying and selling season. Consumers may be facing a complicated market with low inventory and higher interest rates so it has never been more important to show them the value and expertise that REALTORS® bring to the process.

About the writer: Stephanie Sievers is Illinois REALTORS® Director of Marketing.