July marked another cooler month for the housing market, according to Zonda’s newly expanded New Home Market Update report.
The New Home Pending Sales Index (PSI) came in at 109.8, representing an 18.2% year-over-year decline. The index is currently 37% below cycle highs. On a month-over-month basis, seasonally adjusted new-home sales decreased 0.8%.
Eighty-five percent of home builders surveyed by Zonda noted the market was slower than they expected moving from June to July, capturing the shift in demand in response to higher borrowing costs and some economic uncertainty. In response, 87% of builders intend on slowing starts in response to the shifting market.
“The housing market has seen a bit of rebalancing over the past few months,” says Ali Wolf, Zonda’s chief economist. “Some consumers got fed up with the relentless home price growth and decided to move to the sidelines. At the same time, we started to see inventory increase in the new and resale markets. There has been a shift from an intense seller’s market to one that is more buyer friendly and sustainable.”
Of all the select markets, the PSI was up year over year in Cincinnati alone, but the market fell 0.9% month over month. The metros that performed the worst year over year were Sacramento, California; San Francisco; and Seattle. Some of the markets that slowed the quickest this year, including Salt Lake City; Austin, Texas; and Denver, posted a seasonally adjusted month-over-month increase in July.
National home prices increased year over year across entry-level, move-up, and high-end homes. Prices rose 13.6% for entry-level to $337,903, 11% for move-up to $524,843, and 7% for high-end homes to $891,517. The rate of home price growth flattened in the high-end and entry-level tiers month over month and slowed in the move-up market.
Roughly 50% of active projects are offering to-be-built incentives, up from last month. The incentives range from funds toward closing costs to mortgage rate buy downs. The average incentive dollar amount is $7,551, or 1.4% of the list price.
For community count, or any project that has five or more units for sale, there are currently 12,977 actively selling communities tracked by Zonda, down 11.4% from last year. On a month-over-month basis, the national figure slipped 1.6%. Total community count is 32.6% below the same month in 2019.
Las Vegas; Sacramento; and Riverside/San Bernardino, California, grew community count the most year over year. Relative to last year, the biggest community count declines were seen in Seattle, Baltimore, and Atlanta. Community count in 20% of Zonda’s select markets rose month over month, 0% were flat, and 80% fell.
National quick move-ins (QMIs) represent homes that can be occupied within 90 days and, according to Zonda, become important to watch as the market shifts. QMIs totaled 21,532 in July, up 94.6% compared with last year and 5.2% higher month over month. Total QMIs are 1.2% above 2019 levels.
On a metro basis, all of Zonda’s select markets increased QMI count year over year. The markets posting the biggest gains were Riverside/San Bernardino; Tampa, Florida; and Minneapolis. Zonda, however, warned that context is key—QMIs are 12.8% higher than 2019 in Riverside, 15% in Tampa, and 63.4% in Minneapolis. Jacksonville, Florida; Salt Lake City; and Las Vegas have seen the most growth in QMIs compared with the same time in 2019, up 158.8%, 108.5%, and 92.5%, respectively.
