Pending new home sales hit a record high in June, highlighting the remarkable turnaround in the housing market since mid-March. Contract sales rose 17.5% month-over-month and 18.2% year-over-year as increased time at home related to COVID-19 and new lows in mortgage rates spurred shoppers to act now.
New Home Pending Sales Index For Select Markets
Pending new home sales continued to show major locational differences, but all of the select 20 markets in the country posted month-over-month gains and nearly all trended above June 2019 as well.
Thebest new home markets in June were Raleigh, Cincinnati, and Tampa. Raleigh and Tampa had strong housing markets pre-COVID-19 and after a brief pause, buyers are back in full force. Lifestyle and positive net migration are two big contributors to the success for these housing markets today.
In Cincinnati, the combination of a relatively low unemployment rate and extremely constrained resale inventory is helping builders attract buyers and gain market share.
Philadelphia, Los Angeles, and New York all posted substantial month-over-month increases but are still down compared to last year. In these markets, the relative underperformance is partly due to supply as inventory, especially at prices for first-time buyers, is scarce. Within each of these markets, however, some builders had a record-breaking sales month in June and are seeing homes fly off the shelf quicker than they can replace them.
“There is no doubt that sub-3.0% mortgage rates have played a big role in the rapid rebound of the housing market,” said Ali Wolf, Chief Economist at Meyers Research. “There aren’t many more compelling reasons to buy a home than virtually free money.”
The Meyers Research 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. Meyers Research monitors 18,000 active communities in the country and the homes tracked can be in any stage of construction.
The New Home PSI is susceptible to outsized swings in contract activity based on shifts in the number of actively selling communities. As a result, Meyers Research normalizes the data to ensure consistency across the index. The New Home PSI blends the cumulative sales of active or 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 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 Meyers Research.