The housing market has entered a “wait-and-see” phase, where consumers are deciding whether to buy today or wait, resulting in many potential shoppers moving to the sidelines. Consequently, new-home sales slowed in September, according to the latest Zonda New Home Market Update.
Zonda’s New Home Pending Sales Index (PSI), based on the number of new-home sales contracts signed across the country, had a reading of 113.2, representing a 25.9% decline from September 2021. The index is currently 35% below cycle highs and approximately 3% below its September 2019 level. On a month-over-month basis, seasonally adjusted new-home sales increased 5.9%.
According to Zonda, many builders are responding to the overall market uncertainty by pausing on new land deals and slowing overall starts. Zonda data indicates that 81% of builders intend to slow starts, if they have not already, for the rest of 2022, and nearly 89% of builders are planning to slow starts in 2023.
“We are on a quest to find what we’ll call the strike price—a price where consumers see the value in the home and/or community and reenter the market,” says Zonda chief economist Ali Wolf. “Right now, consumers are both uncomfortable with where prices are and, in many cases, unable to make the math work. Strategic price cuts and incentives are sometimes proving effective at pulling back in some of the skittish consumers. In other cases, the quest carries on.”
In September, the PSI was up in just one of Zonda’s select markets on a year-over-year basis: Baltimore. Sales in Baltimore also increased on a month-over-month basis. San Francisco (-64.9%), Phoenix (-61.3%), and Sacramento, California (-54.1%) performed the worst on a year-over-year basis, while Minneapolis (22.3%), Seattle (17.4%), and Washington, D.C. (16.8%) performed the best on a monthly basis.
According to Zonda, national home prices increased on a year-over-year basis across entry-level, move-up, and high-end homes. Prices increased 12.7% for entry-level homes to $340,369, 10.8% for move-up homes to $529,050, and 8.7% for high-end homes to $906,157. While prices are up on a year-over-year basis, roughly 30% of builders across the country reported lowering prices month over month in September, according to Zonda.
According to Zonda, over half of active projects are offering to-be-built incentives in September, an increase from August. The average incentive dollar amount is $10,169, or 2% of the list price.
For community count, or any project that has five or more units for sale, there are currently 13,383 actively selling communities, down 8.6% from last year. On a month-over-month basis, the national count of actively selling communities fell 1.4%. The total community count is 30.5% below its September 2019 level.
Sacramento (+9.3%), Las Vegas (+8.8%), and Riverside/San Bernardino, California (+8%) experienced the largest increase in community count on a year-over-year basis, while Baltimore (-28.7%), Atlanta (-23.7%), and New York (-21.3%) experienced the largest year-over-year community count declines.
National quick move-ins (QMIs), homes that can be occupied within 90 days, totaled 25,543 in September, a 126.7% increase compared with September 2021 and a 6.1% increase compared with August. All of the metro markets tracked by Zonda increased QMI count on a year-over-year basis, led by Cincinnati (+1,186.7%), Tampa, Florida (+929.4%), and Raleigh, North Carolina (+483.5%). According to Zonda, Salt Lake City; Jacksonville, Florida; and Cincinnati have seen the most growth in QMIs compared with the same period in 2019.
