The New Home Pending Sales Index grew 0.7% month-over-month and 44.9% year-over-year. Work-from-home, low interest rates, healthy home equity, a robust stock market, and favorable demographics are the primary drivers of today’s housing strength.
New Home Pending Sales Index for select markets
The universal housing strength continues.
The best new home markets in November were Jacksonville, Raleigh, and Atlanta. The top three markets provide great relative value.
Of the top 10 markets in the country, six are in the Southeast. The region was a migration magnet pre-pandemic and the trend has only grown.
New home sales have surprised to the positive in Los Angeles, Orlando, San Francisco, Washington, DC, and Houston, some of the metros that are the least recovered in terms of employment.
Builders in some markets are starting to see modest signs of a seasonal slowdown from decade-highs, but demand is still far stronger than the levels seen last year. Looking ahead, 2021 is expected to be another good year for housing with supply as the limiting factor.”
Ali Wolf, Chief Economist at Zonda Economics
Methodology
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.
The data provided in this release are for use only by the primary recipient or the primary recipient’s publication or broadcast. This data may not be modified, resold, republished or licensed to any other source, including publications and sources owned by the primary recipient’s parent company without prior written permission from Zonda.
