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Tracy Cross & Associates, Inc.

2nd Quarter 2020


After a troubling start to the year, when homebuilders saw a double-digit drop in sales activity region-wide (largely influenced by the initial impact of the Covid-19 pandemic), the April-June period proved to be a complete reversal of trend with an impressive surge in production home sales throughout the Chicago region.

During the most recent three-month period when shelter-in-place orders were still in full swing, and social distancing was strongly recommended due to the coronavirus, the Chicago region’s production home market recorded its second highest quarterly sales volume in seven years.

Builders in the region registered 1,235 contracts during the 2nd Quarter 2020, an increase of 14.7 percent from 1,077 sales recorded during the same timeframe one year ago, and up a remarkable 29.2 percent compared to the 1st Quarter 2020 on a seasonally adjusted, annualized basis.

A shift from higher-density neighborhoods in Chicago to lower-density areas in the suburbs was clearly a factor during the last three months.  Year-over-year, quarterly sales in the city of Chicago were down 11.5 percent, while the suburban area jumped by 16.7 percent.

A few other factors contributed to the resurgence of sales during the most recent quarter.  First, builders took immediate steps to successfully shift their business practices to account for the Covid-19 pandemic by offering appointment-only showings, virtual model guides and the use of video conferencing services to interact with potential buyers.  Moreover, a steep drop in mortgage interest rates encouraged more purchasing activity, especially from households emanating from the rental apartment sector – and clearly from the city to the suburbs.

Of the 1,235 total sales recorded during the April-June 2020 period, 782 occurred in the single family detached sector, an increase of 9.5 percent compared to the 714 contracts written a year ago, while 453 units were sold across all attached sector product lines, an increase of 24.8 percent year-over-year.

Developers in the city of Chicago continued to struggle due, in part, to the fact that much of this market relies on the vibrancy and lifestyle a large city provides, which was curtailed amidst the pandemic.  Only two developments in Chicago registered ten or more sales during the quarter with Belgravia Group’s newly launched CA6 community recording 18 contracts and Candea Development’s 5748 Hermitage property posting 10 sales.  In addition, with average price points still exceeding $1 million among most new construction units in the city, 70 percent of all developments surveyed recorded either zero sales or just one contract during the quarter.

Builders in the suburbs, on the other hand, performed much better, especially in the Northwestern Corridor, where sales reached 332 units, an increase of 32.8 percent compared to last year’s quarterly volume of 250 contracts during the same period.  The Western Corridor also posted a strong showing with 385 sales, or an increase of 25.8 percent compared to the 306 contracts written during 2nd Quarter 2019.  Rounding out the top three geographic areas was the Southwestern Corridor with an uptick of 12.7 percent, i.e. 311 sales compared to 276 last year.

Price was a contributing factor in the suburbs during the most recent three-month period.  Among all production home sales recorded during the April-June 2020 timeframe, a full 66 percent occurred at price points below $350,000.

Top selling communities in the suburban market included D.R. Horton’s Cambridge Lakes community in Pingree Grove, with four different product lines, registering 75 sales during the quarter, followed by Lennar’s Woodlore Estates community in Crystal Lake and Stonegate in Manhattan, both registering 34 contracts. Pulte Home’s Northpointe community in Plainfield followed with 20 units sold, with the company’s Wagner Farms development in Naperville registering 18 contracts during the quarter.

Leading homebuilders during the April-June 2020 timeframe included D.R. Horton with 238 sales, followed by Lennar Homes with 224 contracts, M/I Homes (199 sales), Ryan Homes (125) and Pulte Homes (101). These five companies, with a combined 887 total production home sales, continued to dominate the Chicagoland new home market, capturing a 71.8 percent market share position.