Zonda’s new home sales metric captured 650,890 new homes sold in November on a seasonally adjusted annualized rate, up 2.8% month-over-month and 29.2% year-over-year. The Zonda Market Ranking classified national new home sales as “slightly overperforming” in November. Today’s sales are supported by incentives, with nearly 60% of new home projects offering some kind of seller concession.

“What has been reinforced over the past few months is that rising mortgage rates, higher home prices, and the news cycle can prompt consumers to put homebuying plans on hold,” said Ali Wolf, chief economist for Zonda. “For many, this isn’t a permanent hold, though, as even slight improvements in affordability can help reignite demand.”

Sales outpace seasonality in November

Zonda’s new home sales metric counts the number of new home contract sales each month and accounts for both cancellations and seasonality. This metric shows there were 650,890 new homes sold in November on a seasonally adjusted annualized rate. This was a gain of 2.8% from last month and an increase of 29.2% from a year ago. On a non-seasonally adjusted basis, 48,034 homes were sold, 29.6% higher than last year and 0.2% above the same month in 2019.

New home sales volume is now 12% below the recent peak seen in July 2023.

The New Home PSI climbed following recent declines    

Total sales volume is influenced by both supply and demand. Zonda’s New Home Pending Sales Index (PSI) was created to help account for fluctuations in supply by combining both total sales volume with the average sales rate per month per community. The November PSI came in at 132.6, representing a 42.6% rise from the same month last year. The index is currently 23.8% below cycle highs. On a month-over-month basis, seasonally adjusted new home sales increased 2.4%.

• The markets that posted the best numbers relative to last year were Phoenix (+158.9%), Riverside/San Bernardino (+106.8%), and Denver (+103.9%). These markets slowed dramatically last year but have since stabilized. The base effect of last year’s low levels contributed to the large YOY percentages.
• While no markets were down year-over-year, the metros that posted the smallest gains were New York (+4.1%), Baltimore (+5.1%), and Charlotte (+13.2%).
• On a monthly basis, Cincinnati, Los Angeles/OC, and San Antonio performed best.

50% of new home markets over-performed in November

In order to add further context on the metro level, we created the Zonda Market Ranking (ZMR). The ZMR accounts for both sales pace and volume, is seasonally adjusted, and is taken as a percentage relative to a baseline market average. Based on the percentage above or below baseline, markets are bucketed into performance groups ranging from significantly underperforming to significantly overperforming relative to historical activity.

• The National ZMR index came in at 110.7 in November, indicating a slightly overperforming market.
• The major metros overperforming their historical averages most in November 2023 were Port St. Lucie, Chicago, and Tampa.
• Colorado Springs, Portland, and Denver were significantly underperforming. Salt Lake City, Cape Coral, Seattle, Reno, San Jose, Phoenix, New York, and Richmond were slightly underperforming.
• Among our top fifty markets, 50% were overperforming, 28% were average, and 22% were underperforming. Last month, 54% were overperforming, 30% were average, and 16% were underperforming.
• Importantly, the ZMR does not account for what it takes to sell a home. For example, securing a sale might still feel difficult in a “significantly overperforming” market, but if incentives offered result in a sale, we count the sale.

Entry-level pricing flattened out

National home prices flattened year-over-year in the entry-level market but rose for move-up and high-end homes. Entry-level prices flattened at $339,000 but rose 0.6% for the move-up market to $529,670 and 3.1% for high-end homes to $924,725.

Supplementing our data with a monthly survey Zonda conducts, 10% of builders reported raising prices in November, down from 16% in October. Further, 75% reported holding prices flat, up from 71% last month. The percentage of builders who reported price increases has slowed as seasonality kicked in and builders further evaluate the affordability backdrop.

Incentives are still common in today’s housing market to help address the affordability constraints for buyers. 57% of new home communities across the country offered incentives in November, flat month-over-month. Many builders find incentives are necessary to help seal the deal with consumers.

Community count remained low                                                                                    

There are currently 13,896 actively selling communities tracked by Zonda, up 1.1% from last year. On a month-over-month basis, the national figure slipped 2.0%. Total community count is 27.5% below the same month in 2019. The lack of competition from other new home communities has allowed for some upward pressure on the average sales rate per month per community. Zonda defines a community as anywhere where five or more units are for sale.

• Austin (+17.7%), Minneapolis (+13.5%), and Salt Lake City (+12.7%) grew community count the most year-over-year. Relative to 2019, community count is down 13%, 2%, and 18%, respectively.
• The biggest community count declines were in San Francisco (-17.1%), Tampa (-13.9%), and Seattle (-12.7%).
• Community count in 8% of our select markets rose month-over-month, 4% were flat, and 88% fell.

National quick move-ins (QMIs) totaled 28,287, down 18.9% compared to last year and 5.9% lower month-over-month. Total QMIs are 107.9% above 2019 levels. QMIs are homes that can likely be occupied within 90 days.

QMIs sell out quicker than they can be replaced in many markets as consumers view these homes as a great alternative to the resale market given the dearth of supply. The quick rise in QMIs last year led to price drops at many new home communities. We aren’t seeing the same build-up today.

• The markets that grew the most year-over-year were Salt Lake City (+23.4%), Cincinnati (+22.9%), and Riverside/San Bernardino (+22.5%).
• Salt Lake City, Las Vegas, and Cincinnati have seen the most growth in QMIs compared to the same time in 2019, up 255.8%, 212.5%, and 147.1%, respectively.
• QMIs are down the most compared to 2019 in Baltimore (-62%), San Francisco (-52%), and Atlanta (-52%).

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.

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About Zonda

Zonda provides data-driven housing market solutions to the homebuilding industry. From builders to building product manufacturers, mortgage clients, and multifamily executives, we work hand-in-hand with our customers to streamline access to housing data to empower smarter decisions. As a leading brand in residential construction, our mission is to advance the home building industry, because we believe better homes mean better lives and stronger communities. Together, we are building the future of housing.

Media Contact

Valerie Sheets, Zonda, 949-294-9557, [email protected], zondahome.com

SOURCE Zonda