Just when the good times couldn't get any better for residential developers, they did anyway, as Chicago-area new home sales and prices climbed last year from already high levels the year before.

The price of new homes sold in the fourth quarter averaged an eye-popping $507,998 in the city fueled by luxury condo sales, according to data compiled by Schaumburg-based real estate consultancy Tracy Cross & Associates Inc. In the year-earlier quarter, city condos sold for an average of $282,202.

The huge increase is explained in part by a large number of sales at Millennium Centre in River North, a luxury project being marketed by American Invsco Corp., says Erik Doersching, vice-president at Tracy Cross.

While the statistics have shown little softening thus far, developers are nervous because many downtown condos are planned and the economy is slowing.

"There seem to be a lot of condos in the $400,000-to-$750,000 range," says Jeffrey Gelman, president of Chicago development firm a Chicago Capital Consultants Inc. "The buyers will be fewer because there's so much product out there."

Lower-priced homes, most of which are found in the Southwest suburbs, shouldn't be affected, Mr. Doersching sas. "It's real simple," he says. "Price, price, price."