Partially driven by incentives and discounts, new-home sales have returned well above 2019 levels nationally and across most top markets, according to Zonda’s New Home Market Update.
In July, Zonda data shows that sales climbed 26% from the same month in 2019, and prices have risen in select communities again.
“What a difference a year makes,” says Ali Wolf, Zonda’s chief economist. “This time last year, quick move-ins were starting to pile up, the majority of buyers moved to the sidelines, and builders were scrambling to figure out the best way to stimulate demand. Today, home buying activity has returned to more healthy levels. While the market isn’t ‘easy,’ builders are capturing more than their historical share of buyers.”
Zonda’s new-home sales metric—which counts the number of new-home contract sales each month and accounts for both cancellations and seasonality—shows there were 708,201 new homes sold on a seasonally adjusted annualized rate in July. While a decline of 0.6% from the previous month, it was an increase of 34.3% from a year ago. On a nonseasonally adjusted basis, 59,836 homes were sold, 36.4% higher than last year and 12.3% above the same month in 2019.
According to Zonda’s New Home Pending Sales Index (PSI)—created to account for fluctuations in supply by combining total sales volume with the average sales rate per month per community—some of 2022’s weakest markets are posting the largest year-over-year gains. The July PSI came in at 142.0, representing a 36.9% increase from the same month in 2022. While 18.5% below cycle highs, the index on a month-over-month, seasonally adjusted basis increased 0.2%.
Sacramento, California (+144.5%), San Francisco (+107.7%), and Phoenix (+104.5%) posted the best numbers compared with the dramatic slowdowns these markets faced last year. “The base effect of last year’s low levels is driving the large increases,” Zonda notes. On a monthly basis, Denver, Minneapolis, and Phoenix were the best-performing markets on a monthly basis.
Of the select Zonda markets, only Salt Lake City posted a year-over-year decrease of -17.4%. Jacksonville, Florida (+5.2%) and New York (+15.7%) were the other worst-performing metros, but they still maintained positive numbers.
National home prices slightly increased year over year across all products, including 0.2% for entry-level to $339,417; 0.4% for move-up to $526,766; and 3.8% for high-end homes to $913,491. In July, 44% of builders reported raising prices, and 51% reported holding prices flat, according to Zonda. At the end of last year, roughly 50% of builders were lowering prices, and 50% were holding prices the same.
Down 0.6% from 2022, 13,810 actively selling communities are being tracked by Zonda. The national figure slipped 2% month over month, while the total community count is 28.4% below the same month in 2019. The lack of competition from other new-home communities is allowing for some upward pressure on the average sales rate per month per community. Zonda defines a community as anywhere with five or more units for sale.
Austin, Texas (+14.9%), Riverside/San Bernardino, California (+11.1%), and Minneapolis (+8.1%) grew community count the most year over year, and it fell the most in Tampa, Florida (-18.7%), San Francisco (-12.9%), and Seattle (-12.9%). Community count in all select markets dropped year over year.
Up 1.5% compared with last year but 4.1% lower month over month, national quick move-ins (QMIs) totaled 25,364. Total QMIs are 55.9% above 2019 levels. Zonda reports that QMIs are selling out quicker than they can be replaced in many markets as consumers view these homes as a great alternative to the resale market given the supply.
Thirty-six percent of Zonda’s select markets increased QMI count year over year, with Los Angeles/Orange County (+40.8%), Phoenix (+30.6%), and Denver (+25.1%) leading the metros. Compared with July 2019, Jacksonville (+174.8%), Las Vegas (164.0%), and Salt Lake City (+117.6%) have seen the most growth in QMIs. QMIs are down the most compared with 2019 in Atlanta (-58%), Seattle (-57%), and Baltimore (-53%).
