New Home PSI: New home sales slipped month-over-month on low inventory but grew 36.0% year-over-year
Jan 25, 2021
The New Home Pending Sales Index slipped 3.6% month-over-month as community count fell, but was 36.0% higher than last year. 2020 finished as the best year for the new home market since 2006 and early indications from both Zonda data and conversations with builders tell us that demand is still strong in early-2021.
New Home Pending Sales Index for select markets
Home sales continue to shine with supply as the limiting factor:
The best new home markets in December were Jacksonville, Raleigh, and Atlanta, the same as last month.
Sales turned negative in Seattle year-over-year based on inventory. Builders are still hitting a healthy average sales rate per community with eager buyers, but community count is down 27% compared to last year.
Even after months of rapid home price appreciation, the current monthly mortgage payment still offers home shoppers a compelling reason to buy a home. Watch for affordability concerns later in the year though.
Community count is down 17% year-over-year nationally and some builders are intentionally only releasing a few homes for sale each month. These factors will naturally hold back sales without there being a fundamental shift in demand.”
Ali Wolf, Chief Economist at Zonda Economics
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.