According to Zonda’s latest New Home Market Update, the choppiness in the new-home market remains as seasonal distractions, low consumer confidence, and high housing costs slow demand.
However, a bright spot in the slower market is the recent downward pressure on mortgage rates. This is happening despite the continual increases in the short-term rate by the Federal Reserve. While rates are still in the 6% range, representing a doubling since the beginning of the year, they have been below 7% for five weeks now.
“There are a lot of reasons to fret about today’s housing market given the uncertainty and lack of buyer urgency,” says Ali Wolf, Zonda’s chief economist. “There are some shoppers, however, that are responding favorably to strategic price cuts, incentives, and, most important, quality. Homes that are thoughtfully designed, well located, and priced right are still selling, bucking the broader market slowdown.”
Zonda’s new-home sales metric shows there were 478,211 new homes sold in November on a seasonally adjusted annualized rate. This was a decline of 10.6% from the prior month and a drop of 35.9% from a year ago. On a nonseasonally adjusted basis, 34,741 homes were sold, 38.5% lower than last year and 27.5% below the same month in 2019.
The New Home Pending Sales Index (PSI) for November came in at 104, representing a 38.1% decline from the same month last year. The index is currently 41.8% below cycle highs. On a month-over-month basis, seasonally adjusted new-home sales increased 4.1%.
For the fourth consecutive month, the PSI was up in just one of the select markets year over year—Baltimore. The metros that performed the worst year over year were Denver, Phoenix, and Salt Lake City.
On a monthly basis, Salt Lake City, New York City, and San Francisco were the best performing markets. Salt Lake City and San Francisco, for example, were two of the markets to slow the quickest earlier this year. The month-over-month uptick suggest the price drops and incentives are proving to be effective with consumers at some communities.
National home prices increased year over year across entry-level, move-up, and high-end homes. Prices rose 11.1% for entry-level to $339,273, 9.6% for move-up to $527,221, and 7.8% for high-end homes to $904,085. Roughly 47% of home builders across the country reported lowering prices month over month in November.
Incentives are increasingly common in today’s housing market given the slower sales. Roughly 55.2% of active projects are offering to-be-built incentives, up from last month. The average incentive dollar amount is $12,642, or 3.7% of the list price.
For community count, or any project that has five or more units for sale, there are currently 13,478 actively selling communities tracked by Zonda, down 7.2% from last year. On a month-over-month basis, the national figure fell 1.5%. Total community count is 29.6% below the same month in 2019.
Las Vegas, Phoenix, and San Antonio grew community count the most year over year, while community count fell the most in Baltimore, New York City, and Atlanta. Eight percent of the select markets rose month over month, while 92% fell.
National quick move-ins (QMIs), or homes that can be occupied within 90 days, totaled 31,789, up 173.5% compared with last year but 6.4% lower month over month. Total QMIs are 51.7% above 2019 levels.
On a metro basis, all of Zonda's select markets increased QMI count year over year. The markets posting the biggest gains were Tampa, Florida; Cincinnati; and Phoenix. QMIs in Tampa are roughly 43% above 2019 levels, 130% above in Cincinnati, and 171% higher in Phoenix.
Salt Lake City; Jacksonville, Florida; and Phoenix have seen the most growth in QMIs compared with the same time in 2019, up 258.1%, 199%, and 171.5%, respectively.
