The New Home Pending Sales Index (PSI) from Zonda increased 3.6% from October to November to a reading of 166.1. The PSI reading is a 2% increase on a year-over-year (YOY) basis from November 2020 and is 42.5% higher than the PSI reading in November 2019.
According to Zonda, the housing market is below peak activity seen in January 2021, but the gap is narrowing. The index is 4.6% below the recent peak and is 33.2% higher than the pre-pandemic high seen in February 2020.
“The New Home Pending Sales Index is back in the positive after five months where activity was trending below 2020 levels,” says Zonda chief economist Ali Wolf. “The year-over-year increase in November sales was led entirely by the average sales rate component, which tells us that buyer demand still far outweighs available new-home inventory.”
Of the New Home PSI’s two components, the new-home orders component decreased 12.9% YOY in November as supply trickled lower and the average sales rate per community input increased 3.4% YOY. The new-home orders component, which looks at total sales volume, has been impacted with ever-decreasing active project count.
The increase in the sales rate per community input is the first positive growth for the component since May 2021. The average sales rate per community captures how well builders are selling at the open communities and strips out the supply side.
“Some seasonality has returned to the housing market, but the extent is less notable than compared with pre-COVID years,” Wolf says. “It is critical to track how buyers respond to high home prices and rising interest rates, but for now, indications on the demand side point to a strong spring selling season for 2022.”
Pending new-home sales trended above November 2020 levels in 16 of the 25 select markets analyzed by Zonda, an increase from 10 markets in October. Seventeen of the 25 markets increased month over month, led by Salt Lake City (31.6%), with Charlotte, North Carolina (-8%), Atlanta (-4.4%), Minneapolis (-2.1%), Sacramento, California (-2%), Washington, D.C. (-2%), Dallas (-1.8%), Philadelphia (-1.5%), and Seattle (-0.1%) recording monthly declines.
Twenty-four of the 25 markets posted a positive spread between the percent change in average sales rate and new-home orders, indicating current levels of volume are being restrained by lack of supply. Sales pace remain up YOY in 20 markets, an increase from 11 in October, and six metros posted an increase in volume compared with November 2020, up from one in October.
Click here to view the full Zonda New Home PSI report.
