By Dennis Rodkin

Crain’s Chicago Business

January 26, 2017

2017.01.26 crains article-new home sales up in 2016 after two years of declinesNew-home sales rose in the Chicago area for the first time in three years, although the total was “unimpressive,” according to a longtime analyst.

Developers sold 4,124 houses, condos and townhouses in the 10-county Chicago metropolitan area last year, up 10.2 percent from 2015, according to a report from Tracy Cross & Associates, a real estate consulting firm in Schaumburg.

Despite the increase, 2016 sales were almost 7 percent below 2013’s tally, which was followed by two years of dips. In all, for 2008 to 2016, builders have sold an average of 3,942 new homes a year, Cross reported, or about one-sixth the average for the previous dozen years. Between 1995 and 2007, Chicago-area builders sold an average of over 24,300 new homes a year.

“It’s good to see the number go up again, but it’s unimpressive,” said Tracy Cross, the head of the firm.

Nationwide, sales of new homes rose 12.2 percent in 2016 over the year before, the U.S. Census Bureau and the Department of Housing & Urban Development reported this morning. An estimated 563,000 new homes were sold in the U.S. last year, up from 501,000 in 2015.

Cross’ reports cover only developments with 40 homes or more, so they don’t include homes on scattered single lots in city neighborhoods. A year-end total for that category of new construction is not yet available.

For the city homes covered in Cross’ report, the increase in sales was far larger than the suburbs’ uptick. The year-end total in the city, 577, was up 26.3 percent from 2015’s 457.

In the suburbs, the increase was 8 percent, from 3,284 sales in 2015 to 3,547 in 2016.

More suburban homes aren’t being built for several reasons, Cross said. One is the allure of living in the city for younger buyers, who in past years were inclined to head for relatively inexpensive new construction on suburban sites. Another, he said, is people who leave Illinois because of its financial situation.

The houses they leave behind “add to the competition” that new houses would face, he said.

There’s a silver lining in the low sales figure, Cross said. For the first time in several years, four homebuilding firms had more than 350 local sales each last year.

“It’s a far cry from when they were doing over 1,000 sales a year,” Cross said, “but 350 is a strong, sustaining number that means some of the national builders will keep their presence in Chicago and not bail.”

The four firms were CalAtlantic Homes, which sold 658 homes locally during the year, D.R. Horton/Cambridge Homes (595 sales), Pulte Group (434) and MI Homes (387).

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