The New Home PSI is a unique measure of the housing market because it is made up of two components*: new home orders and the average sales rate per community. The new home orders component fell 10.8% year-over-year in April as supply continued to trickle lower. The average sales rate per community input also fell, decreasing 7.5% year-over-year.
New home orders, which look at total sales volume, have been significantly impacted with ever-decreasing active project count. In other words, sales are down primarily because inventory is scarce. The average sales rate per community captures how well builders are selling at the open communities and strips out the supply side. The average sales rate component is showing that demand is negatively responding to higher homeownership costs. Both the new home order volume and average sales rate ticked lower on a monthly basis.
“The housing market has historically been an interest rate sensitive industry and today is no different,” said Ali Wolf, Zonda’s chief economist. “The average monthly mortgage payment is up over 40% since the end of last year driven by higher mortgage rates and higher home prices. This affordability shock is pushing many potential homebuyers out of the market as qualifying for a mortgage has become increasingly difficult.”
Pending new home sales trended above April 2021 levels in five of our twenty-five select markets, down from nine last month. Nine of twenty-five of our select markets increased month-over-month. Austin increased the most on a year-over-year basis, rising 9.5%, while San Francisco led month-over-month growth but remains down the most year-over-year.