The downward movement of mortgage rates since October has translated to an improvement in new-home sales, according to the latest New Home Market Update from Zonda.
Zonda’s new-home sales metric captured 650,890 new homes sold in November on a seasonally adjusted annualized basis, a 2.8% increase compared with October and a 29.2% jump compared with November 2022.
“What has been reinforced over the past few months is that rising mortgage rates, higher home prices, and the news cycle can prompt consumers to put home buying plans on hold,” Zonda chief economist Ali Wolf says. “For many, this isn’t a permanent hold, though, as even slight improvements in affordability can help reignite demand.”
On a nonseasonally adjusted basis, 48,034 homes were sold in November, 29.6% higher than last year and 0.2% above the same month in 2019. New-home sales volume is 12% below the recent peak seen in July, according to Zonda.
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—was 132.6 in November, a 42.6% increase compared with the same month last year. The index is 23.8% below cycle highs.
Phoenix (+158.9%), California’s Riverside/San Bernardino (+106.8%), and Denver (+103.9%) reported the best PSI numbers relative to last year. Zonda says each of the three markets slowed dramatically last year before stabilizing, and, as such, the low levels in 2022 contributed to triple-digit year-over-year improvements. New York (+4.1%), Baltimore (+5.5%), and Charlotte, North Carolina (+13.2%) posted the smallest year-over-year gains.
The Zonda Market Ranking (ZMR), created to provide further context on the metro level, accounts for both sales pace and volume and is taken as a percentage relative to a baseline market average. Markets are bucketed into performance groups ranging from significantly underperforming to significantly overperforming relative to history. Among the 50 markets analyzed by Zonda, 50% were overperforming, 28% were average, and 22% were underperforming.
The National ZMR index came in at 110.7 in November, indicating a slightly overperforming market. The metros overperforming their historical averages the most in November were Port St. Lucie, Florida; Chicago; and Tampa, Florida. Colorado Springs, Colorado; Portland, Oregon; and Denver were significantly underperforming in November, while Salt Lake City; Cape Coral, Florida; Seattle; Reno, Nevada; San Jose, California; Phoenix; New York; and Richmond, Virginia, were slightly underperforming.
In November, national home prices flattened year over year in the entry-level market but rose for move-up and high-end homes. Entry-level prices remained at $339,000, and prices increased 0.6% to $529,670 for move-up homes and 3.1% to $924,725 for high-end homes.
According to a Zonda survey of home builders, 10% of builders reported raising prices in November, down from 16% a month ago, while three-quarters of builders reported holding prices flat. Incentives remain common in the market, with 57% of new-home communities across the country offering incentives.
There were 13,896 actively-selling communities tracked by Zonda in November, a 1.1% increase compared with last year. Total community count is 27.5% below the same month in 2019. Zonda defines a community as anywhere where five or more units are for sale.
Austin, Texas (+17.7%), Minneapolis (+13.5%), and Salt Lake City (+12.7%) grew community count most year over year, while San Francisco (-17.1%), Tampa (-13.9%), and Seattle (-12.7%) reported the biggest year-over-year declines.
National quick move-in (QMI) homes—homes that can likely be occupied within 90 days—totaled 28,287 in November, down 18.9% compared with last year and down 5.9% compared with October. Salt Lake City, Cincinnati, and Riverside/San Bernardino reported the largest year-over-year increases in QMIs. Compared with 2019 levels, Salt Lake City, Las Vegas, and Cincinnati have seen the most growth in QMIs, while Baltimore, San Francisco, and Atlanta have experienced the largest declines.
