By: Dennis Rodkin
February 10, 2025
Crain’s Chicago Business
Credit: Daynae Gaudio
A photo rendering of a house in DR Horton’s Ashford Place development in Plainfield that sold for a little under $465,000 in December
Homebuilding firms in late 2024 started the largest number of new-home communities in the Chicago area in more than a decade, which could soon help ease the tight inventory that has plagued the housing market.
In the fourth quarter of 2024, builders launched 40 new communities in the region, according to a new report from Tracy Cross & Associates, a housing industry consultancy based in Schaumburg. The typical amount in recent years has been 10 to 15 new communities.
“We haven’t had a quarter with more than 20 for at least 10 years, and we probably haven’t had a quarter with 40 since the Great Recession in 2007,” said Erik Doersching, president and CEO of Tracy Cross & Associates.
The result for homebuyers, particularly those shopping in outer-suburban areas and beyond like Plainfield, Tinley Park and Kenosha, Wis., should be that later this year, “you’ll have more options,” Doersching said.
The welcome increase is a slow-motion response to the dearth of new-home supply that Doersching has been reporting since the COVID-era housing boom picked clean the standing inventory.
Because of a decade-long droop in new-home sales, builders weren’t prepared for the boom with new communities they could pop up to meet the rise in demand.
In the boom, “they woke up,” Doersching said, but the process of starting a community, including getting plans approved and permitted by local authorities, takes a few years.
Seeing so many communities come online in the quarter “was like ‘wow’ for us,” Doersching said, because “we’ve been saying that if these large builders could get more supply going, they’ll see sales because there’s demand.”
While waiting for the pipeline to deliver, the new-home industry dipped in 2024. The number of new homes sold during the year was down 1% from 2023, Tracy Cross reports, to 5,006 sales. The decline parallels the performance of home sales overall for the region, which were down about 1.3% at year-end.
Even so, new-home sales stayed above 5,000 last year for the third time in the 2020s, rising above the trough of the 2010s. It’s a far cry from annual sales of 20,000 or more in the early years of the 21st century, but Doersching has said repeatedly that he believed building more homes would pay off with increased sales.
Illinois has ranked at the bottom of U.S. states for new homes built. Factors include a slow-growing or shrinking population that dampens demand for adding housing units and a highly regulatory climate in the state.
Strong demand for the modest inventory they’ve been building may finally have convinced companies to increase their Chicago-area production. Five companies with the most sales, between 400 and 1,100 units, according to Tracy Cross data, are all national firms that have a policy of not commenting on local sales figures.
The five top-selling homebuilders were Texas-based D.R. Horton, Florida-based Lennar, Georgia-based Pulte Group/Del Webb, Ohio-based M/I Homes and Virginia-based Ryan Homes — all with sales of 400 or more during 2024. Locally owned Lexington Homes ranked sixth, with fewer than 100 homes.