The Zonda New Home Pending Sales Index fell 6.1% month over month in March, but rose 50% year over year from March 2020, up to 158.2.
March’s outsized YOY growth reflects the housing crash at the start of the pandemic a year ago. In addition, the index is up 47.9% from March 2019.
“This time last year, people were worried about the housing slowdown,” says Ali Wolf, Zonda’s chief economist. “The ensuing rebound was sharp and has proved to have staying power. Increased savings, the ability to work from anywhere, and low interest rates are powerful forces for home buyers of all different ages even in a challenging market.”
The New Home PSI is made up of two components: new-home orders and the average sales rate per community. The new-home orders component rose by 21% YOY in March, but fell 2% from February to March. At the same time, the average sales rate per community rose 51% YOY and 1% MOM.
The new-home orders component is negatively affected by a drop in sales, while both components suffer as 89% of builders report intentionally capping sales per community. “It takes two to tango in the housing market, with demand and supply equally important,” Wolf says. “The month-over-month drop is a reflection of the limited inventory on the market today, including resulting sales caps. Rising home prices are causing some buyers to raise an eyebrow, but, for now, demand is still high.”
At the regional level, pending new-home sales trended above March 2020 levels in 24 out of 25 select top markets, with Denver, Philadelphia, and Raleigh, North Carolina, leading the way. San Francisco, Sacramento, California, and Las Vegas showed the strongest change in contract sales on a month-over-month basis. Seattle was the only market where sales fell YOY, down 11.9% from March 2020. Zonda attributes this to the market’s tight new-home inventory and relatively strong sales in March 2020.
Click here to view the full report.
