Bloomington-Normal home sales declined last year, though there are a couple positive signs. The Mid-Illinois Realtors Association said home sales were down 5.9% in 2025. Berkshire-Hathaway Home Services Managing Broker Ed Neaves said there is still a supply bottleneck.
"I guess it has gotten better. But we're still down so significantly. There's still bidding wars. There are still people up against cash offers. It's still a sellers' market," said Neaves at a housing conference put on by the Bloomington Normal Economic Development Council.
Sales of new Bloomington-Normal housing were down more than 35% last year, the Realtors Association said. Sales of existing homes declined by 3.8%.
Neaves said there were 101 listings of homes for sales in Bloomington-Normal zip codes last week. That’s twice what it was at the same time a year ago, but a pittance compared to the 1,200 or so at this time in 2007. Neaves picked 2007 for the comparison because after that home construction slowed nearly to a halt in the U.S. Neaves said housing supply shortages compound each year from population growth and as old inventory gets torn down. He said national figures now show a shortage of 6.8 million homes.
“You can’t build your way out of that,” said Neaves.
A post-pandemic interest rate hangover continues to hamper the realty market. The Federal Reserve lowered interest rates for a couple years after COVID to stimulate the economy. Neaves said that encouraged people to refinance or to renovate and take out an equity loan. Interest rates have risen substantially as the Fed tried to rein in inflation and have not come back down enough to shift buyer behavior.
“...which then takes houses off the market,” said Neaves. “It's called the golden handcuffs effect. I wouldn't want to go out and buy a new house and pay 7% when I'm here at 2.5-3%. It's going to triple my payment. There's a squeeze all the way across.”
Neaves said interest rates and rising supply costs limited new construction and there weren't enough homes to sell.
“People are just a little cautious, not knowing exactly what the future holds for them financially or the interest rates, so kind of waiting. But when the interest rates get to 5%, then the floodgates will open," said Neaves.
He said new construction has stayed steady or risen slightly. Sales of new homes have not. They fell last year by more than a third to just 64 homes for the year. Prices for new homes continued to rise, although not at the pace experienced several years ago. The average price for a new single family residential unit rose 3.1% last year. This new construction is not aimed at the middle of the market. The average price for a new home in the twin cities topped $452,000. That’s up nearly $14,000 from 2024.
Neaves said his own company has 200 lots ready to build when conditions improve. He said the City of Bloomington has also identified about 200 houses that are uninhabitable or are in poor shape, which could be rehabbed.
“That’s a start,” said Neaves.
The average price of a new or existing home sold in the Twin Cities last year was about $283,000. That’s up about $9,000. Total dollar value of homes sold dropped slightly.
Neaves noted both Bloomington and Normal continue to encourage renovation and infill through grant offerings. They offer incentives for significant multifamily rental construction projects.
He said the state should help as well through passage of zoning legislation that could encourage infill.
“They're trying to allow local authorities with Home Rule [powers] to have more density. The Illinois Realtors Association has also introduced legislation for a savings account for down payment, so that people can put money away and have it protected and not taxed and then use it for down payment,” said Neaves.
