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 September 2024.

It was a goldilocks new home market in September

While industry participants celebrated lower interest rates in September due to the anticipated Fed rate cut, consumers weren’t so sure. Zonda asked builders if they saw an improvement in the market in September as interest rates marched toward 6%, and the answer was generally no. From our survey, 51% of builders said they hadn’t noticed much of a difference in sales or traffic, while 28% said they were seeing a bit more traffic.

That sentiment was captured in Zonda’s data. On a seasonally adjusted annualized rate, 715,673 new homes were sold in September, up just 0.3% from last month. When we adjust sales for supply and seasonality, the national housing market came in slightly overperforming for the ninth month in a row. Incentives are still the name of the game, though.

“Lower mortgage interest rates were the housing story in September, but they have since trended up,” said Ali Wolf, Zonda’s chief economist. “It is important to remember what drives mortgage interest rates. Federal Reserve policy can help guide mortgage rates directionally, but investors impact day-to-day action. The recent volatility, however, does not change our thesis that mortgage rates are more likely to be down than up in 2025.”

New home sales improved modestly month-over-month

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 715,673 new homes sold in September on a seasonally adjusted annualized rate. This was a gain of 0.3% from last month and an increase of 7.5% from a year ago. On a non-seasonally adjusted basis, 56,946 homes were sold, 9.2% higher than last year and 8.0% above the same month in 2019.

Sales adjusted for supply ticked up slightly

Total sales volume is influenced by both supply and demand. 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 September PSI came in at 147.2, representing a 7.3% rise from the same month last year. The index is currently 15.5% below cycle highs. On a month-over-month basis, seasonally adjusted new home sales increased 3.4%.

• The markets that posted the best numbers relative to last year were Phoenix (+31.7%), Seattle (+26.3%), and Washington, DC (+19.4%).
• Inversely, the metros that performed the worst year-over-year were San Francisco (-23.7%), Atlanta (-14.6%), and Tampa (-11.2%).
• On a monthly basis, Salt Lake City, Seattle, and Baltimore were the best performing markets. Salt Lake City increased 22.2% relative to last month.

The ZMR was slightly overperforming for the 9th month in a row

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 came in at 118.4 in September, indicating a slightly overperforming market, ranking in line with last month and this time last year.
• Zonda’s snapshot markets were split between 60% overperforming, 30% average, and 10% underperforming in September.
• Among Zonda’s top 50 major markets, 66% were overperforming, 20% were average, and 14% 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.

New home prices dropped year-over-year

National home prices decreased year-over-year across entry-level, move-up, and high-end homes. Prices fell 3.2% for entry-level to $329,772, 2.8% for move-up to $518,471, and 1.6% for high-end homes to $912,877. The declines represent a mix of select price drops, smaller home sizes, and differing locations.

Supplementing our data with a monthly survey Zonda conducts, 16% of builders lowered prices in September, 63% held prices flat, and 21% raised prices. In August, for comparison, 15% of builders lowered prices MOM, 65% held prices flat, and 20% increased prices.

No scary build up in QMIs nationally

There are currently 15,160 actively selling communities tracked by Zonda, up 6.6% from last year. On a month-over-month basis, the national figure grew 0.1%. Total community count is 21.3% below the same month in 2019. Zonda defines a community as anywhere where five or more units are for sale.

• Dallas (+15.2%), Baltimore (+15.1%), and Atlanta (+8.9%) grew community count the most year-over-year.
• Community count fell the most in Los Angeles/OC (-19.0%), San Francisco (-18.0%), and Philadelphia (-15.4%) relative to last year.

National quick move-ins (QMIs) totaled 31,703, up 9.5% compared to last year but 3.4% lower month-over-month. Total QMIs are 38.1% 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 6 months ago.

• On a metro basis, 60% of Zonda’s select markets increased QMI count year-over-year.
• The markets that grew the most year-over-year were Charlotte (+60.9%), Cincinnati (+50.8%), and Philadelphia (+37.1%).
• Cincinnati, Las Vegas, and Salt Lake City have seen the most growth in QMIs compared to the same time in 2019, up 229.7%, 202.6%, and 164.8%, 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 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. 

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.

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