Tracy Cross & Associates, Inc.

4th Quarter 2020

Despite an uncertain beginning to 2020 with the onset of the Covid-19 pandemic, production builders in the Chicago metropolitan region ended the year with a total of 4,895 new home sales, translating to an impressive 17.1 percent year-over-year increase from the 4,179 units sold in 2019. By product type, 3,126 sales occurred in the single family sector and 1,769 in the form of townhomes, duplexes and condominiums.

Over 95 percent of all sales activity was concentrated in the suburbs, with many buyers looking to relocate to a lower density setting as most of Chicago was under strict lockdowns throughout the year. With 4,676 new homes sold outside of the city of Chicago, the suburban market was up 22.3 percent compared to 3,823 sales recorded in 2019. The city, on the other hand, posted its slowest year on record since Tracy Cross & Associates Inc. began tracking production sales 25 years ago, recording only 219 total contracts during the 12-month period, a near 40 percent year-over-year drop from 356 sales registered in 2019. For perspective, the average pace over the last decade in Chicago stood at 504 sales annually.

The last two quarters of 2020 became the first six-month period to boast a seasonally adjusted, annualized sales volume above the 5,000 mark in 12 years.  In fact, the 5,796 annualized sales generated during the most recent six months, reflected a volume some 26.3 percent higher than any other six-month period (seasonally adjusted) since 2008.

With consecutive quarters of improving sales activity in the region’s production home market, primarily in the suburbs, together with tighter inventory levels in both the resale and new construction sectors, the average sales price of a new production home sold in suburban Chicago during the October-December 2020 period increased 6.2 percent year-over-year including a 7.1 percent jump in the single family sector and a 2.9 percent rise among townhome, condominium and duplex units. This trend is likely to continue in 2021 as the rollout of Covid-19 vaccines should serve to bolster the economy; mortgage interest rates remain low throughout the year; and new construction housing inventory is suppressed.

In reference to inventory levels, supply-side constraints continue to plague the region as new home communities reaching sell-out in 2020 were not replaced “in kind” on a one-to-one basis.  For example, at the close of 2020, only 328 production developments (i.e., those containing 10 or more total units) were actively marketing new homes, a level 6.3 percent lower than the 350 active communities in 2019.  Moreover, the number of new subdivisions throughout the Chicago region in 2020 was 74.5 percent lower than the 1,285 communities actively marketing at peak in 2008.

With overall sales volumes up and inventory levels down, per-project sales rates during 2020 were the strongest on record in more than a decade.

Geographically, the Southwestern Corridor led the market in terms of 2020 sales with 25.7 percent of all activity occurring within its boundaries (1,259 production units), followed by the adjoining Southwestern DuPage County/Aurora/Kendall County area with 1,082 sales, or 22.1 percent of the market. The Northern Fox Valley and McHenry County submarkets in the Northwestern Corridor combined for a total of 1,043 sales, or 21.3 percent of all regional activity.

Large national homebuilding companies continued to dominate the market with Lennar selling 918 housing units in 2020, followed by D.R. Horton with 832 contracts, M/I Homes with 690, Pulte Homes at 471, Ryan Homes (395) and K. Hovnanian Homes (287). These six national homebuilders combined for a total of 3,593 sales, translating to a 73.4 market share across the entire Chicago region.   

D.R. Horton’s large-scale Cambridge Lakes community in Pingree Grove continued to lead the market in 2020 with 215 total sales recorded among a variety of product lines. Lennar’s Stonegate development in Manhattan and its Raintree Village community in Yorkville recorded 130 and 99 transactions, respectively, followed by Wagner Farms (92 sales) – a Pulte community in Naperville.  Rounding out the top five was Lennar’s Woodlore Estates community in Crystal Lake with 91 total sales.       

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