The housing market is closing 2021 on a high note as buyer demand slowed only marginally for this time of year and builders are working to increase community count. Zonda’s New Home Pending Sales Index rose 2.0% year-over-year and 3.6% month-over-month.
Builders with available inventory are generally still selling well
Pending sales are 33.2% higher than the February 2020 pre-pandemic high but are 4.6% lower than the recent high in January 2021.
Seventeen of 25 of our select markets increased month-over-month, led by Salt Lake City, Riverside, and New York.
Sixteen of the 25 markets are up year-over-year, with New York, Orlando, and Seattle posting the largest annual clips.
The sales numbers in this report are being impacted by 78% of builders making some kind of adjustment to their sales strategy, whether liming sales or only taking contract sales at a certain stage of construction.
Some seasonality has returned to the housing market, but the extent is less notable than compared to pre-COVID years. It is critical to track how buyers respond to high home prices and rising interest rates, but for now, indications on the demand side point to a strong spring selling season for 2022.
Ali Wolf, 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.