Housing Market Braces for Impact as Mortgage Rates Soar Past 7%

The Federal Reserve's recent interest rate hike has sent shockwaves through the housing market. According to Freddie Mac, the rate for a 30-year fixed-rate mortgage surpassed 7% for the first time since January 2025 last week.

This increase is attributed to rising inflation and could have severe consequences for an already strained housing market. Serrater Chapman, director of applied research at the Woodstock Institute, warns that higher interest rates will lead to increased monthly housing costs for new homebuyers, limit supply, and reduce the likelihood of homeowners selling their properties.

Chicago's median sale price was $405,000 in August 2026, a 8.5% increase from the same time last year, while Illinois Realtors reported a national median sale price of $429,000, up 1.2% from August 2025.