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Tracy Cross & Associates, Inc.

2nd Quarter 2017

The new production home market stumbled during the 2nd Quarter 2017 as builders in the ten-county metropolitan area recorded only 983 sales representing a drop of 19.2 percent from the same time period a year ago.  Homes sold during the most recent quarter translated to a seasonally adjusted annualized rate of 3,681 marking a decrease of 19.9 percent from the first quarter’s annualized pace of 4,596 and a drop of 9.7 percent from 2016’s aggregate volume of 4,075.

In the city of Chicago, new home contract signings during the April-June 2017 period totaled 122, a year-over-year decline of 40.2 percent.  This rather sizable decrease was attributable, in part, to the limited number of moderately priced townhome/condominium developments active in the city during the most recent quarter compared to last year.  For example, the larger-scale 1345 Wabash community in the Near South Side neighborhood, which was a sales leader in 2016 with an average base sales price below $400,000, reached final sellout last year and was not replaced in kind.    Currently, 60 percent of all active attached sector developments in the city support average base prices at or above the $1 million mark.  These developments averaged less than three (3) sales during the most recent quarter on a per project basis.

For the 1st Half 2017, sales in the city of Chicago totaled 249 units, down 24.1 percent from the 328 contracts recorded during the same time period in 2016.  Sales leaders through the first six months included Magellan Development’s Vista-River and Park Residences in the Loop with 26 sales, followed by Illume (LF Development) in the Near West Side with 19 sales; Enclave (2501 Homer LLC) in Logan Square with 16 contracts; and Ritz Carlton Residences (Prism Development) in the Near North Side with 13 sales.

New home sales in the suburban area totaled 861 during the second quarter representing a year-over-year decline of 14.9 percent compared to the 1,012 contracts taken during the 2nd Quarter 2016.  In the single family sector, sales during the most recent quarter equaled 555, a drop of 14.5 percent year-over-year.  In the attached sector, suburban sales during April-June 2017 period totaled 306 representing a decrease of 15.7 percent from last year.

Geographically, the most notable decline in suburban activity occurred in the Northwestern Corridor where contract activity fell from a level of 364 units during the 2nd Quarter 2016 to just 254 units during the most recent quarter.  This 30.2 percent drop resulted, in part, from the sellout or near sellout of several larger-scale developments that were not replaced in the market with similar type developments.  These included three communities by CalAtlantic Homes, i.e. Gilberts Town Center in Gilberts, Tuscany Woods in Hampshire and Talamore in Huntley.

The only broad geographic area posting a net increase in year-over-year sales was the Northern Corridor which improved its overall volume by 35.2 percent during the 2nd Quarter 2017.  This rise in activity resulted from several new community openings including Ryan Homes’ Midlane Club single family development in Wadsworth; Taylor Morrison’s Colfax Crossing townhome project in Des Plaines; and Lexington Homes’ Lexington Pointe townhome community, also in Des Plaines.

While overall suburban home sales during the 2nd Quarter 2017 were down year-over-year, first half totals marked an increase of 5.5 percent bolstered by a stronger first quarter.  For instance, the suburban marketplace recorded a total of 2,031 contract signings during the January-June 2017 period compared to 1,926 sales during the same timeframe in 2016.   In the single family detached sector, sales through the first six months of 2017 totaled 1,319, up 6.8 percent year-over-year.  Among attached sector developments, sales totaled 712 units representing an increase of 3.0 percent compared to last year.

Suburban single family sales leaders during the 1st Half 2017 included six developments with 25 or more contracts led by D.R. Horton’s Carillon at Cambridge Lakes-Resort/Freedom active adult development in Pingree Grove, Pulte’s Timbers Edge community in Woodridge, and D.R. Horton’s Cambridge Lakes-Horizon in Pingree Grove.  Respective sales volumes in these three communities of 36, 29 and 29 were followed by Kettering Estates-75s and 90s (MI Homes) in Lemont with 28 sales, Greywall Club (CalAtlantic) in Joliet with 26 sales, and Deerbrook (Pulte) in Aurora with 25 sales.

In the townhome/duplex/condominium sector, three developments posted 25 or more sales during the January-June period of this year including D.R. Horton’s value-oriented Cambridge Lakes-Seaboard series in Pingree Grove with 48 sales, along with two developments by MI Homes in Naperville, i.e. Sedgwick-Georgetown and Mayfair-Uptown, at 35 and 30 sales, respectively.  Following these communities was another MI Homes development, Sagebrook in Lockport, with 23 sales.

Through the full January-June 2017 period individual single family developments in the city of Chicago were selling at a seasonally adjusted, annual average rate of 11.38 units per project while those in the suburbs were moving at a yearly volume of 13.38 per development.  In the townhome/duplex/condominium sector, developments in Chicago proper were selling at a pace of 13.15 per project, while in the suburban area, per project sales during the January-June 2017 period averaged 13.51 on a seasonally adjusted, annualized basis.

The top home building companies in the region during the first half of this year included three that posted 300 or more sales.  D.R. Horton was the market leader with 327, followed closely by CalAtlantic at 321 and MI Homes at 309.  Rounding out the top ten, in rank order, were PulteGroup (236), K. Hovnanian (127), Taylor Morrison (70), William Ryan Homes (62), Ryan Homes (58), Lexington Homes (51), and Toll Brothers (46).

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