Tracy Cross & Associates, Inc.

4th Quarter 2022

Production home builders in the Chicago metropolitan region sold a total of 4,275 new housing units in 2022, a decrease of 22.8 percent from the post-pandemic peak of 5,536 in 2021, and 14.4 percent below the 4,993 new homes sales registered in 2020 during the heart of the Covid-19 crisis. That said, 2022 still outpaced the regional average of 3,978 contracts recorded during the 2015-2019 timeframe.

Nevertheless, inflationary pressures on consumers, as well as the recent spike in mortgage interest rates, had an adverse effect on the housing market in 2022, especially during the latter half of the year. For example, sales during July-December 2022 accounted for just 36.8 of total volumes during the 12-month period.  And, while influenced by the typical seasonal fluctuations in the market, the recent drop in activity was most evident during the 4th Quarter despite interest rate buy down incentives or equivalent sales price adjustments by major builders.

Geographically, the Northern and Western corridors experienced the largest year-over-year sales retrenchments as these areas played host to some of the most significant price increases over the last two years. The city of Chicago underwent similar sales erosion as developers struggled to offer product in the lower to moderate price ranges. Meanwhile, portions of the Northwestern Corridor, mainly in its McHenry County and Northern Fox Valley submarkets, as well as the Southern Corridor and DeKalb County, recorded moderate sales increases year-over-year, largely attributed to the availability of new units at more competitive price points. The Southwestern Corridor, while off 19.7 percent year-over-year, still outperformed its average yearly volume during the five years prior, again on the basis of its overall competitive price position.

While builders throughout the region continued to add new inventory with 42 communities opening in 2022, this level of new development was not enough to replace the 80 projects that sold out during the year. In other words, the overall number of new construction communities continued to shrink region-wide with just 259 developments marketing new homes at the close of 2022, a drop of another 12.8 percent year-over-year from the already paltry 297 active communities at the end of 2021.

While the region’s top five homebuilding companies, which include Lennar, D.R. Horton, Pulte Homes, M/I Homes and Ryan Homes, have dominated the new construction housing market over the last 10+/- years, their collective market share increased further in 2022 from an annual average of 63.7 percent during the 2017-2021 timeframe, to 75+ percent in 2022. This was due, in large part, to the ability of these publicly traded companies to better absorb the recent challenges associated with land acquisition and development, increases to commodity and construction costs, as well as a less favorable lending environment for both consumers and developers alike.

In 2022, Lennar was the leading homebuilder with 947 sales, followed by D.R. Horton and Pulte Homes with 851 and 629 sales, respectively. Rounding out the top five were M/I Homes and Ryan Homes with respective volumes of 492 and 346 units. 

Grande Reserve in Yorkville was the region’s best-selling community in 2022 with 139 contracts across five product lines, marketed by both Ryan Homes and D.R. Horton.  Following Grande Reserve was D.R. Horton’s Cambridge Lakes master-planned community in Pingree Grove, and its Stonewater community in Wonder Lake recording 126 and 112 sales, respectively across multiple series of homes. The remaining top sellers included Pulte’s Naper Commons development in Naperville with 94 home sales and D.R. Horton’s Lincoln Valley community in North Aurora with 80 units sold.