TCAI Logo-Squished for Insertion in Excel HeaderTracy Cross & Associates, Inc.

1st Quarter 2017

New production home sales in the ten-county Chicago region rose during the 1st Quarter 2017 to a level of 1,247 units distributed between 774 in the single family detached sector and 473 in the form of townhomes, duplexes and condominiums.  On a year-over-year basis, contract activity was up 20.1 percent overall with volumes in the market’s single family component increasing by 30.7 percent, while the attached sector moved up by 6.1 percent.

By area, sales in the suburbs totaled 1,119 units during the January-March timeframe, improving by 22.4 percent from the same period a year ago.  This upturn was largely due to the 100 contracts written by D.R. Horton at its large-scale Cambridge Lakes community in Pingree Grove, along with 68 sales recorded by Pulte Group in Naperville at its Atwater and Ashwood Pointe single family communities.  On a per-product-line basis, single family sales leaders for the quarter included Pulte’s Springs series at Atwater with 24 sales, followed by Pulte’s Timbers Edge development in Woodridge and D.R. Horton’s Horizon series at Cambridge Lakes with 21 and 20 sales, respectively.  Another 14 individual developments registered at least 12 sales during the quarter.

In the suburban townhome/duplex/condominium market, the Seaboard townhome series at Cambridge Lakes was the clear leader with 29 contracts for the three-month period, followed by CalAtlantic’s Tuscany Woods duplex project in Hampshire and CalAtlantic’s Prairie Pointe townhome community in South Elgin, each registering 15 sales for the quarter.

Unlike the suburban marketplace, sales in the city of Chicago were flat with just 128 sales recorded during the January-March 2017 period, representing a modest 3.2 percent increase from the same time period last year.  Among 37 developments actively selling new units, only four recorded 10 or more sales.  These included three high-rise condominium communities, i.e. Illume in the Near West Side neighborhood, Vista-River and Park Residences in the Loop and Ritz-Carleton Residences in the Near North Side area, along with the Enclave townhome development in Logan Square.

On a seasonally adjusted annualized basis, new construction home sales region-wide totaled 4,419 during the January-March 2017 period representing an increase of 11.8 percent from the yearly pace of 3,953 registered during 2016’s final quarter and an increase of 8.3 percent from 2016’s total volume of 4,081.  From a longer term comparative perspective, however, the annual rate noted for the first quarter signals the 34th consecutive quarter that new home sales in the region failed to move past the 5,000-unit mark.  Equally troubling is the fact that the seasonally adjusted, annualized rate of 4,419 units recorded during the 1st Quarter 2017 was 72.2 percent below the region’s average annual sales pace of 15,903 recorded over the entire 1994-1st Quarter 2017 time line.  On a brighter note, since annual production sales volumes first dipped below the 5,000-unit mark in the 4th Quarter 2008, the 4,419 sales registered during the last three months (seasonally adjusted and annualized) represents the second highest volume since that time.

New construction sales activity over the past three months was concentrated in three suburban submarkets including the Southwestern DuPage County/Aurora/Kendall County area, the Northern Fox Valley, and the Southwestern Corridor.  Builders in each of these submarkets combined to sell 295, 236 and 177 sales, respectively.  Noted areas within these submarkets included Naperville, Aurora, Yorkville and Woodridge in the Southern DuPage County/Aurora/Kendall County submarket, Pingree Grove,  Elgin, South Elgin and Hampshire in the Northern Fox Valley, and Joliet, New Lenox and Lemont in the Southwestern Corridor.

D.R. Horton, CalAtlantic Homes, Pulte Group, M/I Homes and K. Hovnanian Homes each recorded 80 or more sales during the most recent January-March quarter.  By builder, D.R. Horton and CalAtlantic each posted 187 contract signings, followed by Pulte, M/I and the K. Hovnanian with respective volumes of 165, 117 and 83.

In suburban Chicago, price continues to drive sales, especially in the single family detached sector.  For instance, almost 60 percent of all single family contracts written during the 1st Quarter 2017 occurred at base price points between $200,000 and $399,999.  In the attached sector, 55 percent of all sales activity was concentrated at prices below $300,000 with another 20 percent occurring between $300,000 and $399,999.

A much different scenario exists in the city as most sales have been generated at the upper end of the market.  For example, among the 120 condominium and townhome sales recorded in Chicago during the January-March 2017 period, 72 percent occurred at price point of $750,000 and above, with more than 50 percent concentrated at $1 million and higher.  It is important to note that very few new construction condominium/townhome developments in the city offer prices in the lower ranges.  In fact, two-thirds of all active developments forward average offering prices above the $1,000,000 mark.

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