Sales were lower than the demand backdrop in January suggested, as 89% of builders intentionally slowed activity to better align contracts with production capacity.
40% of builders reported to Zonda an early arrival of the spring selling season in January, ahead of typical early/mid-February start.
The New Home PSI came in at 149.8 for January, representing a 14.0% decrease from January 2021, an exceptionally strong time for the new home market. The PSI is up 22.5% compared to two years ago.
Sales increased month-over-month in select Midwest and Northeast markets, including Cincinnati, Minneapolis, Philadelphia, and New York.
New home activity increased year-over-year in Riverside, Orlando, and Las Vegas, three housing markets that were especially big pandemic winners driven, in part, by relocation shoppers.
The housing market in 2022 can be defined by two words: enthusiasm and panic. Buyers are trying to rush into this tight market before rates raise much higher and builders are in a race against time to help meet the interest.
Ali Wolf, Chief Economist, Zonda Economics
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.