Zonda’s New Home Pending Sales Index (PSI)—a residential real estate indicator based on the number of new-home sales contracts signed across the country—came in at 158.3 for December, showing a 3.6% month-over-month dip as community count fell. However, it still was 36% higher than last year.
Overall, 2020 finished as the best year for the new-home market since 2006, and early indications show demand is still strong in early 2021.
“We have every type of buyer engaged today, whether that’s first-time, move-up, luxury, retiree, investor, second home, and even relocation,” says Ali Wolf, chief economist at Zonda. “The seemingly universal interest combined with tight inventory is driving home prices up, but low mortgage rates are offsetting the impact for now.”
The best new-home markets in December were Jacksonville, Florida; Raleigh, North Carolina; and Atlanta, the same top three markets as the prior month. Local builders benefit not only from the low interest rates and the work-from-home economy, but also from the diverse labor markets, temperate climates, and relative housing affordability.
On the other hand, sales turned negative in Seattle year over year based on inventory. The city’s drop is directly related to fewer new homes for sale. For example, the sales pace at new-home communities has held steady, but community count is down 27% compared with last year.
“Community count is down 17% year over year nationally, and some builders are intentionally only releasing a few homes for sale each month,” explains Wolf. “These factors will naturally hold back sales without there being a fundamental shift in demand.”
