The major project will be located on North and Bethel avenues, near Saint Mary's Catholic Church.
A total of 490 single-family homes will be built.
The development will take place in four phases.
Part of the first phase is a ten-acre sports park which will be run by the city.
It will include three softball fields that will double as baseball fields, a play area for toddlers, restrooms and a parking lot.
The mayor of Sanger says a sports park is something the community does not yet have.
"The city of Sanger is known as a sports town, so a lot of kids have been coming to our council meetings and looking and asking for us to build something like this for them," Mayor Frank Gonzalez said.
The sports park will be among the first items completed in the project.
Framing for houses is expected to start going up next year.
The project is part of a partnership between the city and San Joaquin Valley Homes.
The mayor says construction is underway on two affordable housing complexes -- with 70 to 75 units each.