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 147.1 for June, showing a 2.4% year-over-year increase and 0.8% month-over-month growth.
Looking further into the monthly report’s data, 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 fell 20% year over year in June, as supply issues mounted. The average sales rate per community input rose just 5% year over year, held back by sales caps and tough comps in 2020.
“Everyday distractions are back for home shoppers causing some builders to move further down their interest lists. Fortunately, the demand pool remains deep,” says Ali Wolf, Zonda’s chief economist. “Countervailing forces will pick up in the coming months though as mortgage rates offer a boost, but the expected drop in home sales will spook some buyers.”
New-home sales trended above June 2020 levels in 14 of 25 select markets, down from 23 last month. Last June, the housing market began to kick into overdrive for some metros like Salt Lake City, Phoenix, and Austin, Texas. It is in these early-to-recover markets where sales are currently experiencing the largest year-over-year declines, as builders hurry to replenish their housing inventory.
Lifestyle markets like New York, Los Angeles, and San Francisco experienced more severe COVID-19 limitations and rebounded later. The PSI in these markets is up the most year over-year with 49.7%, 41.1%, and 40.8%, respectively.
“Housing demand is ever so slightly slower than a few months ago, largely because of seasonality,” continues Wolf. “Seasonality is a normal part of the housing market that was notably absent in 2020. The seasonality in 2021 is met by some buyers pausing their home search due to high prices or frustration with the competitiveness, but the overall housing market remains strong.”
