Zonda’s New Home Pending Sales Index (PSI) decreased to 157.3 for December, representing a 4% decline from November and a 5.3% decline from December 2020.
According to the monthly report, the housing market is below peak activity seen in January 2021. The index is 9.7% below the recent peak but is 26.3% higher than the pre-pandemic high seen in February 2020.
“The roller coaster in the housing market is not over yet. Both new and resale inventory remain down double digits compared to last year, interest rates are on the rise, and the disruptions caused by the supply chain are running amok,” says Ali Wolf, Zonda’s chief economist. “Demand for housing is still strong, but there are headwinds.”
Of the New Home PSI’s two components, new-home orders fell 17.1% year over year in December as supply continued to trickle lower. New-home orders have been significantly impacted with ever-decreasing active project count. In other words, sales are down primarily because inventory is scarce.
The average sales rate per community input returned to the negative after November’s positive read, decreasing 4.3% year over year. While the new-home order volume fell month over month, the average sales rate was practically unchanged.
Pending new-home sales trended above December 2020 levels in just six of the 25 select markets, down from 16 last month. Los Angeles/Orange County registered the largest year-over-year increase, jumping 36.4% and is currently at cycle highs. Orlando, Florida; San Antonio; New York; and Las Vegas also posted notable year-over-year gains.
Seven of the 25 select markets increased month over month, with Las Vegas, San Francisco, and Minneapolis posting the largest increases.
“Getting a true read on the housing market is tricky today given 75% of builders in December were intentionally capping their sales given the lack of available inventory,” continues Wolf. “The expectation is that new-home supply will increase throughout the year, but development and building delays continue to pose a challenge in trying to get more homes built.”
