Tracy Cross & Associates, Inc.

1st Quarter 2021

During the 1st Quarter 2021, production homebuilders in the Chicago region nearly doubled their sales volume from a year ago to reach a quarterly level not seen since before the Great Recession more than a decade ago.

During the January-March 2021 period, 1,869 total production homes were sold in the ten-county Chicago region, translating to an 80.1 percent increase compared to the 1,038 contracts written during the same period in 2020. For perspective, builders have averaged 1,056 “first quarter” contracts since 2011.  On a seasonally adjusted, annualized basis, the region is on-pace for 6,624 home sales by the close of 2021, which would translate to a 33.8 percent increase over the 4,952 contracts recorded in 2020.

During the most recent three-month period, sales were split between 1,145 in the single family sector and 724 among attached product lines. Regionwide, the city of Chicago saw an uptick of 60 percent year-over-year with 112 sales, with the suburban region enjoying an 81.5 percent increase with 1,757 transactions completed between January and March.

While pricing in the City of Chicago decreased by nearly ten percent, mainly due to the introduction of moderately-priced product outside of the city’s core, the suburban market witnessed a price increase of more than ten percent year-over-year, as most builders pushed prices due to demand.  Additionally, builders were faced with building material shortages leading to large cost increases for lumber and other products. Those have largely been passed to consumers as the average price of a suburban single family home jumped by 9.5 percent year-over-year, and now stands at just under $400,000, up nearly $50,000 from a year ago when the average hovered around $350,000. The multi-family sector saw an even larger spike with average prices moving from the $325,000s in 2020 to an average of over $365,000 during the current quarter.

When looking at the region’s top five builders, which account for over 70 percent of all suburban sales, prices started creeping up slowly at the end of last summer, but the major spike occurred during the most recent quarter. For example, Lennar, with 319 contracts accepted between January and March, increased its average base sales price by $28,000 over the last three months, with average incremental movements ranging anywhere from $11,000 to $50,000 among its 26 active communities.  D.R. Horton, with 251 transactions during the most recent quarter, increased prices by an average of $17,164, while Pulte Homes, with a sales volume of 229 units this quarter, increased prices by an average of $14,962.  At the same time, M/I Homes, with 200 sales from January through March, moved its prices up by an average of $18,623.  Finally, Ryan Homes, with 159 units sold during the quarter, had the largest average price increase (over $40,000) among its 11 communities.

Grande Reserve in Yorkville was the region’s top selling community during the January-March 2021 timeframe.  Here, D.R. Horton and Ryan Homes combined for 59 sales among three total product lines.  At both Cambridge Lakes in Pingree Grove (D.R. Horton) and Raintree Village (Lennar) in Yorkville, 54 sales were recorded during the 1st Quarter 2021.  In addition, Lennar sold 47 units among three product lines at Stonegate in Manhattan, while Pulte Homes recorded 42 transactions at Wagner Farms in Naperville.  Additive to these Top 5 communities, 73 other developments recorded 10 or more sales during the 1st Quarter 2021. By comparison, only 14 communities managed 10 or more sales during the same period in 2020.