The Meyers Research New Home Pending Sales Index (PSI) for April reported new home contracts are 32.5% below last year and 29.2% lower than last month.
The latter half of April showed more strength, however.
Among its findings:
- While each market uniformly saw a pullback related to the historic job losses, the extent of the decline was not universal. For example, even in the hardest hit markets, well-positioned and well-priced new homes are still hitting a solid (albeit slower than usual) sales pace because of the dearth of inventory in the existing home market.
- San Francisco, Los Angeles, and Washington, DC experienced the largest pullback in contract sales on a year-over-year basis. These markets have higher than average home prices, some denser urban real estate, and stricter stay-at-home orders, which contributed to many buyers deciding to pull a wait-and-see strategy.
- The impact of homes sales on the economy is vast both in terms of direct jobs added as well as the ripple effect on related industries.
“We posed the question at the beginning of March asking whether fear or low mortgage rates would prevail,” said Ali Wolf, chief economist at Meyers Research. “During the first six weeks of the pandemic, fear was the clear winner. As the stay-at-home orders get lifted, however, we are seeing the focus go back to rates. The duration of the job losses still acts as the wild card, though.”
The Meyers PSI is built on proprietary data that covers 60% of the production new home market across the United States. Reported number of new home pending contracts are gathered and analyzed each month. The New Home PSI is a leading indicator of housing demand compared to closings because it is based on the number of signed contracts at a new home community. Meyers Research monitors 18,000 active communities in the country and the homes tracked can be in any stage of construction.
