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Valerie Sheets
vsheets@zondahome.com
707-949-294-9557
Housing Market

February New Home Pending Sales Index

Mar 21, 2022

New home sales are down month-over-month and year-over-year as total community count is 10% lower than last year and 90%+ of builders report throttling sales. The PSI is up 25.2% compared to February 2020 levels.

Housing demand is holding strong for now even in the face of rising interest rates.

  • The PSI grew the most in San Antonio, Salt Lake City, and San Francisco month-over-month and San Antonio, New York, and Seattle year-over-year.
  • The New Home PSI is made up of two components: total new home orders and the average sales rate per month per community. Total orders are an output of inventory and sales caps in today’s market. The average sales rate component adjusts for total inventory but will also be impacted by sales caps.
  • Total new home orders were positive year-over-year in New York, San Antonio, and Sacramento.
  • The average sales rate component was positive in 10 of Zonda’s select markets, led by Los Angeles, Seattle, and New York.

For now, consumers are motivated by mortgage rates rather than deterred, but we need to recognize that won’t always be the case. Now is the time to be planning and strategizing around affordability constraints.

Ali Wolf, Chief Economist, Zonda Economics

Methodology

The Zonda New Home Pending Sales Index (PSI) is built on proprietary, industry-leading data that covers 60% of the production new home market across the United States. Reported number of new home pending contracts are gathered and analyzed each month. Released on the 15th business day of each month, the New Home PSI is a leading indicator of housing demand compared to closings because it is based on the number of signed contracts at a new home community. Zonda monitors 18,000 active communities in the country and the homes tracked can be in any stage of construction.

The new home market represents roughly 10% of all transactions, allowing little movements in supply to cause outsized swings in market activity. As a result, the New Home PSI blends the cumulative sales of activity recently sold out projects with the average sales rate per community, which adjusts for fluctuations in supply. Furthermore, the New Home PSI is seasonally adjusted based on each markets’ specific seasonality, removes outliers, and uses June 2016 as the base month. The foundation of the index is a monthly survey conducted by Zonda. It is necessary to monitor both new and existing home sales to establish an accurate picture of the relative health of the residential real estate market.

 

 

 

 

 

Ali Wolf

Chief Economist

Ali Wolf

Chief Economist

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