Despite Month-Over-Month Declines New Home Sales Remain Up
Year-Over-Year
NEWPORT
BEACH, Calif., April 19,
2024 /PRNewswire-PRWeb/ -- Today, the experts at
Zonda, the housing industry's foremost advisors, released the New
Home Market Update report for March
2024.
The U.S. economy has dealt the housing market some challenging
cards. At the end of last year, we had a Goldilocks economy where
growth was moderating. The recent inflation and employment releases
show an economy picking up some steam. That plus investors feeling
less enthusiastic about many short-term rate cuts has led to higher
mortgage interest rates.
Sales were lower month-over-month, but the housing market still
came in slightly overperforming for March, and Zonda's survey
captured that most builders said demand was on track with
expectations. The most common concerns cited by builders were
housing affordability and people choosing to sit on the
sidelines.
"We are in a housing market today where people don't have to
move," said Ali Wolf, chief
economist for Zonda. "Existing homeowners are perfectly content
staying put with their low interest rates, and many renters have
decided to stay in place until there is more. This means the market
relies heavily on 'life happens' buyers – those driven by life
events like marriage, divorce, children, or retirement."
The spring selling season improved year-over-year
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 695,337 new homes sold in
March on a seasonally adjusted annualized rate. This was a decline
of 7.0% from last month but an increase of 4.9% from a year ago. On
a non-seasonally adjusted basis, 65,875 homes were sold, 5.7%
higher than last year and 18.3% above the same month in 2019.
The New Home PSI fell month-over-month on higher rates
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 March PSI came
in at 142.1, up 3.1% year-over-year. On a month-over-month basis,
seasonally adjusted new home sales decreased 3.1%. The index is
currently 18.4% below cycle highs.
- The markets that posted the best numbers relative to last year
were Phoenix (+34.6%),
Baltimore (+18.4%), and
Tampa (+16.3%). March sales in
these markets were up 21%, 19%, and 65% compared to 2019,
respectively.
- Los Angeles/OC (-15.1%),
Jacksonville (-12.3%), and
Salt Lake City (-10.6%) declined
year-over-year. Sales were up month-over-month in Jacksonville and Salt Lake City and down in Los Angeles/OC.
- On a monthly basis, Las Vegas,
New York, and Salt Lake City performed best.
The national ZMR remained slightly overperforming in March
In order to add further context to sales, Zonda 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 112.7 in March, indicating a
slightly overperforming market, even with last month and last
year.
- Zonda's snapshot markets were split between 40% slightly
overperforming, 40% average, and 20% slightly underperforming in
March. Among Zonda's top 50 major markets, 62% were overperforming,
22% 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.
New home prices are down
National home prices decreased year-over-year across entry-level,
move-up, and high-end homes. Prices fell 1.9% for entry-level to
$331,436, 0.8% for move-up to
$521,040, and 0.4% for high-end homes
to $906,358. The declines represent
smaller home sizes, differing locations, and select price
drops.
Supplementing our data with a monthly survey Zonda conducts, 51%
of builders reported raising prices in March, unchanged from
February. Further, 44% reported holding prices flat, down from 46%
last month.
Incentives are still common in today's housing market to help
address the affordability constraints for buyers. 58% of new home
communities across the country offered incentives in March, up
month-over-month. Incentives have been a critical sales tool in
today's market.
Community counts have yet to budge
There are currently 14,555 actively selling communities tracked by
Zonda, up 3.2% from last year. On a month-over-month basis, the
national figure slipped 2.1%. Total community count is 24.7% 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.
- Dallas (+13.4%), Austin (+11.9%), and Salt Lake City (+9.6%) grew community count
the most year-over-year. Relative to 2019, community count was down
11%, 13%, and 23%, respectively.
- The biggest community count declines relative to last year were
in San Francisco (-22.6%),
Philadelphia (-19.4%), and
Cincinnati (-14.6%).
- Community count rose month-over-month in 8% of our select
markets, 0% were flat, and 92% fell.
National quick move-ins (QMIs) totaled 26,533, down 5.9%
compared to last year and 7.3% lower month-over-month. Total QMIs
are 41.7% above 2019 levels. QMIs are homes that can likely be
occupied within 90 days.
For many consumers, QMIs provide a great option given the lack
of resale supply. As a result, some builders have pivoted to a more
spec-heavy strategy to help capture today's buyers.
- On a metro basis, 28% of Zonda's select markets increased QMI
count year-over-year. The markets that grew the most year-over-year
were Riverside/San Bernardino (+36.8%), Cincinnati (+32.5%), and Dallas (+24.6%).
- Jacksonville, Sacramento, and San
Antonio have seen the most growth in QMIs compared to the
same time in 2019, up 192.4%, 157.0%, and 144.2%,
respectively.
- QMIs are down the most compared to 2019 in Seattle (-65%), San
Francisco (-61%), and Baltimore (-50%), three markets where
geographic boundaries limit growth.
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.
Visit ZondaHome.com or follow us on LinkedIn and Facebook for
more information.
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, vsheets@zondahome.com, https://zondahome.com
View original content to download
multimedia:https://www.prweb.com/releases/new-home-prices-show-sensitivity-to-mortgage-rates-reports-zonda-302121621.html
SOURCE Zonda