COSTA MESA, Calif., October 22, 2020 — Today, the experts at Zonda, the housing industry’s foremost advisors, released the New Home Pending Sales Index (PSI) for September 2020. The New Home PSI shows pending sales increased month-over-month and year-over-year across the United States. The index is a leading residential real estate indicator based on the number of new home sales contracts signed across the country.
The New Home PSI came in at 170.7 for September, representing a 46.9% increase from September 2019. On a month-over-month basis, new home sales rose by 2.7% from August. September’s data shows that the momentum in the housing market is showing no signs of letting up.
“The U.S. economy flipped from a service-based economy to a goods-based economy and, right now, the most desired ‘good’ is a new home,” said Ali Wolf, chief economist at Zonda. “New home sales are unstoppable even as builders raise prices and election uncertainty heats up.”
Pending new home sales trended above September 2019 levels in nearly every top market across the country. Activity in New York is still down year-over-year but has posted a month-over-month increase for the fifth consecutive month.
The best new home markets in September were Denver, Jacksonville, and Raleigh. Builders in Denver are outselling the national average across all categories: entry-level, move-up, and luxury. Zonda shows Jacksonville home sales are particularly strong in the top third of price points in the metro. Raleigh is outperforming national levels for both the move-up and luxury market. All of these markets are benefiting for positive net in-migration and are among the top markets in the country for Millennials.
“Those that are still employed are putting the economic uncertainty aside and assessing their current situation,”said Wolf. “After spending more time at home for the majority of 2020, many home shoppers realized that more space or an extra bedroom would be nice, and today’s low mortgage rates can help them get there.”
New home data is susceptible to outsized swings in contract activity based on shifts in the number of actively selling communities. As a result, Zonda 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 and removes outliers. The index is baselined to 100 for June 2016. Today’s national New Home PSI is 71% above the base level.
The next Zonda New Home PSI press release, featuring October 2020 data, will be issued on Monday, November 23, 2020 at 9:00 a.m. ET.
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.
Zonda provides data-driven housing market solutions to the homebuilding and multifamily industries. 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.