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Jessica Brewer
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New Home PSI: Sales grew 35% YoY in February as consumers pushed past rising home prices and mortgage rates

Mar 19, 2021

The New Home Pending Sales Index captured the continuation of a great spring selling season. New homes are up 35.0% year-over-year nationally, led by Jacksonville, Cincinnati, and San Antonio.

Capping sales are increasingly commonplace for builders

  • We will continue to show the components of our New Home PSI (total new home orders and the average sales rate per community) in this report to have transparency. For example, Jacksonville, the strongest for new home sales among our top markets, could be hitting even better numbers if more inventory were available as evidenced by a large spread between the two components.
  • Salt Lake City slipped year-over-year in both components due to insatiable demand driven by a robust economy and positive migration trends causing builders to sell out of communities quicker than they can replace them as well as sales caps.
  • The homebuilding industry lost a week in February in parts of the South during the harsh winter weather, and yet contracts signed in top Texas markets surprised to the positive as sales were strong in the month otherwise.
  • This is the last report for a few months that provides a reasonable take on year-over-year housing trends before the comparisons get muddied by the pandemic slowdown in March, April, and early-May 2020.

70% of builders are intentionally slowing or pausing sales to better align contracts with production capacity, which makes drawing market conclusions more difficult. The underlying demand in the housing market is still there, though, even as prices and mortgage rates rise.”

Ali Wolf

Chief Economist, 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.

Ali Wolf

Chief Economist

Ali Wolf

Chief Economist

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