The New Home Pending Sales Index captured the early start to the spring selling season with home sales up 28.1% year-over-year in January. All of the demand drivers that supported the strength in the housing market throughout 2020 are propping up home sales in early-2021 as well.
Pending new home sales trended above January 2020 levels in 16 of the select 20 markets. Our top markets for home sales are Jacksonville, Austin, and Raleigh. These markets have been consistently among the top performers in the country driven by migration trends, relative affordability, and a desirable quality of life.
Looking under the hood with new data
This month, we are introducing an extra layer of detail with the PSI report by including the year-over-year change on the raw index values for two of the data inputs: the average sales rate per community and total new home orders.
In a market where supply ultimately drives how many homes are sold, we wanted to provide additional transparency to explain why some markets posted a drop year-over-year. Note that new home orders look at total sales and will fall based purely on limited supply. The average sales rate per community captures how well builders are selling at the open communities and strips out the supply side. Both, however, can be negatively impacted by builders intentionally capping sales.
By design, Salt Lake City and Las Vegas are the only two of our select metros to post a year-over-year drop in the average sales rate per community.
Both are markets that have been inundated with newcomers from out of state and, as such, some builders have needed to cap their average sales rate per community in order to better balance contract sales with deliveries.
Demand is so hot right now that campouts are back at select communities and some builders have reported hitting the best weeks and/or months in the history of their companies.”
Chief Economist, 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.