New Home Market Update

Zonda tracks 85% of the production new home market across the United States. Given the proprietary database, Zonda is uniquely positioned to capture trends and changes in the new home market. This report showcases the latest housing trends in the new home market for December 2024.

Affordability dampens new home sales to finish 2024

There was much enthusiasm about the upcoming spring selling season as lower interest rates were poised to drive housing demand. Instead, mortgage rates are notably higher today than before the Fed started cutting rates in September. This rise has been influenced by a stronger-than-expected economy, rising debt and deficit levels, and anticipated policy changes from the Trump administration.

New home sales slowed as a result in December, with total contracts down 1% month-over-month and many markets getting downgraded in our Zonda Market Rankings. Prices slipped as well, down year-over-year for entry-level and move-up homes due to select price drops and product changes. Consumers are still showing a preference for new homes, but in many cases, sales are taking longer to close and cost more money.

“The housing market has been hit with a one-two punch of more competition and higher interest rates,” said Ali Wolf, chief economist at Zonda. “Serious buyers are still showing up, but the mortgage rate volatility and uncertainty of 2024 has followed us into 2025.”

Sales down month-over-month, but above prior year

Zonda’s new home sales metric counts the number of new home contract sales each month and accounts for both cancellations and seasonality. This metric shows there were 694,580 new homes sold in December on a seasonally adjusted annualized rate. This was a decline of 0.9% from last month but an increase of 1.8% from a year ago. On a non-seasonally adjusted basis, 51,886 homes were sold, 2.8% higher than last year and 7.4% above the same month in 2019.

The PSI increased slightly year-over-year

Zonda’s New Home Pending Sales Index (PSI) was created to help account for fluctuations in supply by combining both total sales volume with the average sales rate per month per community. The December PSI came in at 136.2, representing a 2.3% rise from the same month last year. The index is currently 21.8% below cycle highs. On a month-over-month basis, seasonally adjusted new home sales decreased 6.5%.

• The markets that posted the best numbers relative to last year were Cincinnati (+18.0%), Houston (+13.0%), and Washington, DC (+12.9%). Cincinnati was up year-over-year but fell 21.0% month-over-month.
• Inversely, the metros that performed the worst year-over-year were San Francisco (-36.6%), Baltimore (-23.0%), and Los Angeles/OC (-21.7%).
• On a monthly basis, Denver, Atlanta, and Los Angeles/OC were the best-performing markets. Denver increased 43.7% compared to the prior month.

Even with market downgrades, National ZMR still rated as slightly overperforming

In order to add further context to sales, Zonda created the Zonda Market Ranking (ZMR). The ZMR accounts for both sales pace and volume, is seasonally adjusted, and is taken as a percentage relative to a baseline market average. Based on the percentage above or below baseline, markets are bucketed into performance groups ranging from significantly underperforming to significantly overperforming relative to historical activity.

The map below shows a snapshot of the top production markets by region. Zonda also offers the ZMR for entry-level, move-up/move-down, and high-end markets. Subscribers of the National Outlook report can access all top markets and the tiered breakdown in Zonda’s portal. Non-subscribers can access the tiered maps for the select 10 markets by clicking below.

Get ZMR Maps

• The National ZMR index came in at 111.9 in December, indicating a slightly overperforming market, ranking in line with last month but better than last year (average).
• Zonda’s snapshot markets were split between 30% overperforming, 50% average, and 20% underperforming. None were underperforming in November. Among Zonda’s top 50 major markets, 50% were overperforming, 30% were average, and 20% were underperforming.
• Importantly, the ZMR does not account for what it takes to sell a home. For example, securing a sale might still feel difficult in a significantly overperforming market, but if incentives offered result in a sale, we count the sale.

Home prices rose for high-end homes

National home prices increased 0.4% year-over-year for high-end homes to $913,112. Prices fell 1.2% for entry-level to $329,518 and 0.7% for move-up to $518,995. The entry-level and move-up declines represent a mix of select price drops, smaller home sizes, and differing locations.

Supplementing our data with a monthly survey Zonda conducts, 19% of builders lowered prices in December, 72% held prices flat, and 9% raised prices. In November, for comparison, 23% of builders lowered prices month-over-month, 68% held prices flat, and 9% increased prices.

4.7% growth in community count year-over-year

There are currently 15,318 actively selling communities tracked by Zonda, up 4.7% from last year. On a month-over-month basis, the national figure grew 0.5%. Total community count is 19.8% below the same month in 2019. Zonda defines a community as anywhere where five or more units are for sale.

• Tampa (+12.2%), Baltimore (+11.1%), and Dallas (+9.6%) grew community count the most year-over-year.
• Relative to last year, the biggest community count declines were in San Francisco (-21.9%), Los Angeles/OC (-16.6%), and Philadelphia (-16.1%).

National quick move-ins (QMIs) totaled 32,700, up 11.4% compared to last year but 2.3% lower month-over-month. Total QMIs are 51.1% above 2019 levels. QMIs are homes that can likely be occupied within 90 days.

For many consumers, QMIs provide a great option given the lack of resale supply. As a result, some builders have pivoted to a more spec-heavy strategy to help capture today’s buyers. In some markets, however, resale inventory is rising and QMIs have become less desirable than earlier this year.

• On a metro basis, 68% of Zonda’s select markets increased QMI count year-over-year.
• The markets that grew the most year-over-year were Seattle (+68.3%), Charlotte (+54.4%), and Baltimore (+36.6%).
• Jacksonville, Las Vegas, and Cincinnati have seen the most growth in QMIs compared to the same time in 2019, up 226.4%, 202.6%, and 182.2%, respectively.

Are you interested in seeing past National Housing Market Update and Pending Sales Index reports? Access our report library to learn more.

Methodology

The Zonda New Home Pending Sales Index (PSI) is built on proprietary, industry-leading data that covers 85% 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 15,000 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. 

About Zonda

Zonda provides data-driven housing market solutions to the homebuilding and multifamily industries. From builders to building product manufacturers, mortgage clients, and multifamily executives, we work hand-in-hand with our customers to streamline access to housing data to empower smarter decisions. As a leading brand in residential construction, our mission is to advance the home building industry, because we believe better homes mean better lives and stronger communities. Together, we are building the future of housing.

Subscribe for updates

Stay in the know with Zonda updates direct to your inbox. Subscribe today to receive webinar information, economics reports, podcast episodes, and more!