“People stopped in their tracks” in March, typically the strongest month of the year.
Crain’s Chicago Business
May 05, 2020
Sales of newly built homes fell locally in the first quarter, according to a report, pushed down by the arrival of the COVID-19 crisis in March, typically the strongest month of the year.
In the first three months of 2020, builders sold 994 new homes locally, down more than 12 percent from the first quarter of 2019, according to a data compiled by Tracy Cross & Associates. It was the lowest first-quarter sales tally since 2012.
Two key reasons are the COVID-19 crisis and the final sellout of some popular suburban developments, according to Erik Doersching, executive vice president at Schaumburg-based Tracy Cross.
“March is usually about 15 percent of the year’s sales,” Doersching said.
“But this year, March was when everything was shutting down and people stopped in their tracks,” he said.
Doersching said a few developments that had planned to launch sales or ramp up marketing efforts in March pulled back, some as early as February when they saw what was on the horizon.
By April, he said, some builders “had rebooted with a new way of doing sales” and might show improved sales in the second quarter. Construction and real estate sales qualify as essential businesses in Illinois’ stay-home order.
Because Cross’ data sources all report by the quarter, Doersching said, the firm can’t break out the months and determine whether January and February were setting up for a stronger spring than ultimately transpired. That’s what happened in the Chicago area’s overall housing market.
Tracy Cross’ data captures only homes sold in developments of 10 or more and covers both detached houses and attached condominiums and townhouses. Homes built on individual lots, a more common model in the city, do not get counted.
Nationwide, new-home sales dropped in March by 15.4 percent from the same time a year earlier, the Commerce Department reported in late April.
The first-quarter sales decline was more pronounced in Chicago than in the suburban area. In the city, builders sold 66 new homes during the quarter, a drop of almost 39 percent from the same time a year ago. The suburbs had 928 first-quarter sales, down about 10 percent from 2019.
The drop in the first quarter followed 2019’s increase in new-home sales of 3.6 percent, the second consecutive year of increases at 3 percent or more.
Doersching said a second component of the first-quarter drop was the end of sales at some southwest suburban developments that had been sales leaders in 2019. Among them were developments by MI Homes in Plainfield, Lennar in Shorewood and Ryan Homes in Joliet, which combined sold an average of 25 homes a quarter in 2019.