A small drop in mortgage rates combined with stock market volatility provided a counterbalanced new-home market in July. Zonda’s New Home Market Update report registered a 0.1% gain in new-home sales compared to June and a 3.5% drop from July 2023.
Accounting for both cancellations and seasonality, Zonda's new-home sales metric shows there were 707,036 new homes sold in July on a seasonally adjusted annualized rate. On a non-seasonally adjusted basis, 59,890 homes were sold, 2.4% lower than last year and 12.4% above the same month in 2019.
"While July was not a blockbuster month for the new-home market, many builders felt sales levels were reasonable given the time of year," says Ali Wolf, Zonda chief economist. "All eyes are now on what the next few months hold. The Fed will likely start cutting interest rates in September and the election will be over in November, both of which will provide much-needed clarity to prospective home shoppers."
Zonda's July New Home Pending Sales Index (PSI), which was created to help account for fluctuations in supply by combining both total sales volume with the average sales rate per month per community, came in at 140.6, signifying a 2.3% drop from July 2023. On a month-over-month basis, seasonally adjusted new home sales increased 1%. The index is currently 19.2% below cycle highs.
Markets that pasted the best numbers compared to last year included Cincinnati (+38.3%), Las Vegas (+15.1%), and Houston (+5.5%). Sales were down year over year in 18 of Zonda’s select markets, led by Jacksonville, Florida; San Francisco; and Dallas. On a monthly basis, Los Angeles/OC, Cincinnati, and Minneapolis were the best-performing markets. Los Angeles/OC increased 21.6% compared to June 2024 but is still down year over year.
To add further context on the metro level, the Zonda Market Ranking (ZMR) was created to account for both sales pace and volume. It is seasonally adjusted and is taken as a percentage relative to the baseline market average. Based on the percentage above or below baseline, markets are bucketed into performance groups ranging from significantly underperforming to significantly overperforming relative to historical activity.
The National ZMR index came in at 112.1 in July, indicating a slightly overperforming market, ranking in line with last month and this time last year. Zonda's snapshot markets were split between 20% overperforming, 60% average, and 20% underperforming in July. Among Zonda's top 50 markets, 54% were overperforming, 22% were average, and 24% were underperforming.
According to Zonda, national home prices decreased year over year across entry-level, move-up, and high-end homes. Prices fell 2.7% for entry-level to $330,027; 1.8% for move-up to $517,423; and 1.1% for high-end homes to $904,467. The declines represent a mix of select price drops, smaller home sizes, and differing locations.
Supplementing with a monthly builder survey data, 18% of builders lowered prices in July compared to June, 66% held prices flat, and 16% raised prices.
Incentives are still common in today's housing market to help address the affordability constraints for buyers. Fifty-eight percent of new-home communities across the country offered incentives in July, the same percentage as June. Zonda's builder survey captured that the majority of builders are offering mortgage rate buydowns, with rates in the high-4%s to high-5%s most common.
Currently, there are 14,771 actively selling communities tracked by Zonda, up 4% from last year. On a monthly basis, the national figure slid 1.9%. Total community count is 23.4% below the same month in 2019. Zonda defines a community as anywhere where five or more units are for sale.
Dallas (+18.8%), Atlanta (+10.3%), and Baltimore (+9.6%) grew community count the most year over year. Relative to 2019, community count was down 7.9%, 48.8%, and 61.2% in these markets, respectively.
Compared to last year, the biggest community count declines were in San Francisco (-18.1%), Los Angeles/OC (-17.4%), and Philadelphia (-13.3%). Zonda says community count in 4% of its select markets rose month over month; 8% were flat; and 88% fell.
Up 10% compared to last year but 2.4% lower month over month, national quick move-ins (QMIs) totaled 30,793. Total QMIs, or homes that can likely be occupied within 90 days, are 40.3% above 2019 levels.
On a metro basis, 64% of Zonda's select markets increased QMI count year over year. The markets that grew the most year over year were Cincinnati (+52.9%); Charlotte, North Carolina (+46.0%); and Orlando, Florida (+30.8%). Las Vegas, Cincinnati, and Phoenix have seen the most growth in QMIs compared to the same time in 2019, up 218.4%, 207.7%, and 155.6%, respectively.
