Housing Market Slows, But Signs Point to Spring Surge if Rates Hold

It’s no secret that December and January are typically the slowest months for home sales. But with spring on the horizon, and mortgage rates holding around 6%, the market here in Naperville and the Far West Chicago Suburbs could heat up quickly as we move into March.

Pending Sales Slumped in December—Despite Decent Rates

December left many scratching their heads. The average 30-year mortgage rate stayed under 6.25%, but the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI) tumbled 9.5% to 71.8. Oddly, that’s 3% lower than a year ago when rates were higher. This drop has pushed existing home sales below an annualized pace of 4 million units.

“December typically has the lowest ‘raw’ PHSI of the year… there’s still something strange about this result.” — TP

The Midwest saw a particularly steep drop—down 14.9%—a level not seen in years.

Homebuilder Confidence Took a Hit in January

Even with rates dipping to 6.06% in early January, the NAHB confidence index fell to 37.

“While the upper end of the housing market is holding steady, affordability conditions are taking a toll on the lower and mid-range sectors.” — Buddy Hughes, NAHB Chairman

What’s surprising is that new homes are often cheaper than existing ones. In October, the median price of a new home was $392K (Census Bureau), while existing homes averaged $415K (NAR). Builders have been scaling down sizes to keep costs manageable, and most new builds are happening in the more affordable South.

Trump’s Housing Affordability Message at Davos

At the Davos forum, Trump declared:

“Homes are built for people, not for corporations, and America will not become a nation of renters.”

He signed an executive order limiting large investors from buying single-family homes. However, this doesn’t mean companies like Blackrock are banned entirely—they’re just restricted from using government-backed loans to do it.  So, it's not something that will impact our area. 

“The house values have gone up tremendously... every time you make it more and more and more affordable... you're actually hurting the value of those houses... I don't want to do anything that’s going to hurt the value of people that own a house.” — Trump

Inflation Still Sticky, Fed Expected to Hold Rates

Recent PCE data shows inflation sticking around 2.8%.

“It’s going to be tough for us to make much progress on inflation over the next couple of months.” — TP

Rate cuts at the Fed’s upcoming meetings look unlikely. CME Group data suggests a 95% chance of no change in January and only an 18% chance of a rate cut in March.

Stay tuned—spring could bring a hot housing market if rates stay low!

If you're considering selling your home, now is a perfect time to set a plan supporting service pros like painters, flooring, electricians etc are most available and sometimes willing to offer better pricing to keep their crews busy.  Check out my article "What Falling Mortgage Rates Mean for Naperville Home Buyers and Sellers in 2026 "

Also see the current homes for sale below 👇🏼