54% of new home markets categorized as overperforming in October
In order to add further context on the metro level, we 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 National ZMR index came in at 112.6 in October, indicating a slightly overperforming market.
- The major metros overperforming their historical averages most in October 2023 were Port St. Lucie, Fort Collins, and Columbia.
- Only one market was significantly underperforming, Colorado Springs. Salt Lake City, Austin, Seattle, San Francisco, Portland, Cape Coral, and New York were slightly underperforming.
- Among our top fifty markets, 54% were overperforming, 30% were average, and 16% were underperforming. Last month, 68% were overperforming, 24% were average, and 8% were underperforming.
Entry-level pricing turned slightly negative
National home prices increased year-over-year for move-up and high-end homes. Prices fell 0.1% for entry-level to $340,575 but rose 0.7% for move-up to $531,488 and 2.8% for high-end homes to $926,430.
Supplementing our data with a monthly survey Zonda conducts, 16% of builders reported raising prices in October, down from 30% in September. Further, 71% reported holding prices flat, up from 64% last month. The percentage of builders reporting price increases has slowed as seasonality kicks in and builders further evaluate the affordability backdrop.
Incentives are still common in today’s housing market to help address the affordability constraints for buyers. 57% of new home communities across the country were offering incentives in October, flat month-over-month. Many builders find incentives are necessary to help seal the deal with consumers.
Little movement on community count
There are currently 13,964 actively selling communities tracked by Zonda, up 0.9% from last year. On a month-over-month basis, the national figure slipped 1.8%. Total community count is 27.4% below the same month in 2019. The lack of competition from other new home communities is allowing for some upward pressure on the average sales rate per month per community. Zonda defines a community as anywhere where five or more units are for sale.
- Austin (+18.1%), Minneapolis (+13.7%), and Orlando (+10.1%) grew community count the most year-over-year. Relative to 2019, community count is down 13% and 30% in Austin and Orlando, respectively, but flat in Minneapolis.
- Community count fell the most in Tampa (-15.0%), San Francisco (-14.5%), and Seattle (-11.8%) relative to last year.
- Community count fell year-over-year in 96% of our select markets and 4% were flat.
National quick move-ins (QMIs) totaled 28,748, down 17.3% compared to last year and 2.7% lower month-over-month. Total QMIs are 106.6% above 2019 levels. QMIs are homes that can likely be occupied within 90 days.
QMIs are selling out quicker than they can be replaced in many markets as consumers view these homes as a great alternative to the resale market given the dearth of supply. The quick rise in QMIs last year led to price drops at many new home communities. We aren’t seeing the same build-up today. However, we are watching the trajectory of inventory in the coming months to see if the pullback in demand starts to result in QMIs rising again like we saw at the end of last year.
- The markets that grew the most year-over-year were Salt Lake City (+41.3%), Cincinnati (+15.7%), and Las Vegas (+3.2%).
- Salt Lake City, Las Vegas, and Phoenix have seen the most growth in QMIs compared to the same time in 2019, up 316.2%, 239.1%, and 126.2%, respectively.
- QMIs are down the most compared to 2019 in Baltimore (-62%), San Francisco (-51%), and New York (-49%), three markets particularly limited by land and lot availability.