Tracy Cross & Associates, Inc.

2nd Quarter 2018

 

The production home market inched forward during the 2nd Quarter 2018 as builders in the ten-county metropolitan area recorded 1,090 sales representing an increase of 5.3 percent from the same time period a year ago.  Homes sold during the most recent quarter translated to a seasonally adjusted annualized rate of 4,078, up 7.4 percent from the 1st Quarter 2018’s annualized pace of 3,798  and an increase of 5.0 percent from 2017’s aggregate volume of 3,884.

New home sales in the suburban area totaled 1,028 during the second quarter representing a year-over-year increase of 13.8 percent compared to the 903 contracts taken during the 2nd Quarter 2017.  In the single family sector, sales during the most recent quarter equaled 653, an increase of 11.4 percent year-over-year.  In the attached sector, suburban sales during April-June 2018 period totaled 375, a jump of 18.3 percent compared to volumes registered during the same time period last year.

In the city of Chicago, however, new home contract signings during the April-June 2018 period totaled just 62, a year-over-year decline of 53.0 percent.  This rather sizable decrease was attributable, in part, to the limited number of moderately priced condominium developments active in the city during the most recent quarter compared to previous time periods.  Currently, over 80 percent of all active attached sector developments in the city support average base prices at or above the $1 million mark.  These communities averaged less than two (2) sales during the most recent quarter on a per project basis.  As a point of reference, just a year ago when developments such as Belgravia Group’s Sedgewick at Locust, CMK Development’s 1345 Wabash, and Sandz Development’s Webster Square were offering new construction condominium residences priced well below $1,000,000, sales were much stronger.

Despite improvement in the overall market during the second quarter, there was not enough sales activity to offset a rather dismal first quarter and continued sluggishness in the city.  In fact, for the 1st Half 2018, net contracts in the region totaled 2,161 units, down 7.0 percent from the 2,323 contracts written during the same time period in 2017.  During this six-month period, both suburban and city sales volumes were lower year-over-year, primarily in the city.

While production home sales in suburban Chicago dropped during the January-June 2018 period year-over-year, a number of developments recorded notable volumes.  For example, a total of 18 separate single family communities registered 20 or more sales during the most recent six-month period led by CalAtlantic’s Apple Creek development in Woodstock with 34 net contracts.  Other suburban single family sales leaders included D.R. Horton’s active adult (55 and older) Carillon at Cambridge Lakes-Resort/Freedom in Pingree Grove with 31 sales; CalAtlantic’s Glenloch-Andare in Algonquin with 31 sales and D.R. Horton’s Fall Creek in Joliet with 30 written contracts.  The common denominator among these top performing developments was an average base sales price position below $275,000.

In the townhome/duplex/condominium sector, four suburban developments posted 30 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 55 sales, along with two developments in Des Plaines, i.e. Buckingham Place by Ryan Homes and Colfax Crossing by Taylor Morrison, at 38 and 33 sales, respectively.  Rounding out the top four was D.R. Horton’s Bayside series at its active adult community, Carillon at Cambridge Lakes in Pingree Grove, with 36 sales.  Another seven developments registered at least 18 sales for the six-month period, which translates to a very respectable three (3) sales or more monthly per project.  These included Pulte Group’s Uptown at Seven Bridges in Woodridge (27); K. Hovnanian’s Tramore in Naperville (26); MI Homes’ Segebrook in Lockport (20); Plote’s Lakes at Boulder Ridge in Lake in the Hills (19); CalAtlantic’s Country Club Hills in Fox Lake (18);  D.R. Horton’s Lake Ridge in Mundelein (18); and MI Homes’ Emerson Park in Naperville (18).

Sales leaders in the city of Chicago through the first six months included just four developments with 10 or more contract signings.   These included 2751 Hampden Court LLC’s The Hampdens in Lincoln Park with 19 sales; Belgravia Group’s Renelle on the River in the Near North Side neighborhood (12); Domain Group’s Caden James in West Town (12) and JK Equities’ 1000M (10).

The Chicago region’s suburban housing market continues to be affected by severe supply-side constraints.   For example, during the 1st Half 2018, only 272 developments were actively marketing new construction units in suburban Chicago, the region’s lowest level in more than 20 years. In the single family sector, just 184 developments were active, while in the attached sector, only 88 communities were marketing new units throughout the entirety of the suburban area.  On a more positive note, however, average per project sales rates among both single family and attached sector developments were at their highest levels in 10+ years.  Among single family subdivisions in the suburbs, the average per project rate registered during the January-June 2018 period stood at 13.63 on a seasonally adjusted and annualized basis, while among townhome, condominium and duplex forms, an average seasonally adjusted, annualized pace of 16.25 was recorded.

The top home building companies in the region during the first half of this year included two that posted 300 or more sales.  D.R. Horton was the market leader with 398, followed by CalAtlantic/Lennar at 334.  Rounding out the top ten, in rank order, were MI Homes (259), PulteGroup (251), K. Hovnanian (121), Ryan Homes (113), Taylor Morrison (67), Toll Brothers (48), Lexington Homes (47), and Hartz Construction (40).

 

 

 

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