New-home sales were stable in October despite higher interest rates and presidential election uncertainty, according to Zonda’s latest New Home Market Update.
“Home sales in October captured the push and pull of the market,” says Zonda chief economist Ali Wolf. “Overall sales did slip modestly month over month but remained nearly 11% above levels last year, a time when mortgage rates averaged about 7.6%. The relatively stable sales environment today underscores the role of need-based buyers who are driving demand, almost regardless of macro conditions.”
Zonda’s new-home sales metric—which counts the number of new-home contract sales each month and accounts for cancellations and seasonality—indicated there were 707,457 new homes sold in October on a seasonally adjusted annualized rate. On a nonseasonally adjusted basis, 55,992 homes were sold, 11.9% higher than October 2023 levels and 7.2% above October 2019 levels.
Zonda’s New Home Pending Sales Index (PSI), which accounts for fluctuations in supply by combining total sales volume with the average sales rate per month per community, came in at a reading of 145.6 in October, 12% above the same month a year ago. On a month-over-month basis, the PSI decreased by 1.1%, and the metric is 16.4% below cycle highs. On a metro level, Denver (+25.2%), San Antonio (+24.7%), and Seattle (+23.8%) posted the best year-over-year PSI increases, while San Francisco (-46.2%), Atlanta (-14.8%), and Tampa, Florida (-14.6%) performed the worst year over year.
To provide further context to sales, Zonda created the Zonda Market Ranking (ZMR). The metric accounts for both sales pace and volume, is seasonally adjusted, and is taken as a percentage relative to baseline market average. For the 10th consecutive month, the ZMR indicates the housing market is slightly overperforming on a national level. Among Zonda’s top 50 major markets, 60% were overperforming, 24% were average, and 16% were underperforming.
Prices decreased year over year for both entry-level and move-up homes, according to Zonda. Prices fell 2.6% to $329,351 for entry-level and 1.6% to $519,064 for move-up homes. In the high-end market, prices fell 0.1% to $915,329. Zonda says the declines represent a mix of select price drops, smaller home sizes, and differing locations.
Zonda’s monthly survey of builders indicates 18% lowered prices in October, 69% held prices flat, and 13% raised prices. Incentives remain an important tool for builders in today’s housing market, with 58% of new-home communities across the country offering incentives in October, the same percentage as the prior month.
There are 15,344 actively selling communities tracked by Zonda, up 8.3% from last year. Total community count is 20.3% below the same month in 2019. Zonda defines a community as anywhere where five or more units are for sale. Baltimore (+18.6%), Dallas (+16%), and Tampa (+10.8%) grew community count the most year over year, while San Francisco (-23.8%), Los Angeles/Orange County (-20.1%), and New York (-14.4%) experienced the largest drop in community count levels compared with October 2023.
National quick move-in homes (QMIs) totaled 30,487 in October, up 1.9% compared with last year but 11.5% lower month over month. QMIs are defined as homes that can likely be occupied within 90 days. QMIs provide an alternative option for consumers in the current market given the lack of resale supply. Many builders have pivoted to spec-heavy strategies to help capture today’s buyers. However, resale inventory is beginning to return in some markets, and QMIs have become less desirable than earlier in the year in those markets, according to Zonda.
The markets that grew QMIs the most year over year were Charlotte, North Carolina (+43.3%), Orlando, Florida (+31.4%), and Cincinnati (+22.2%). On a metro basis, 52% of Zonda’s select markets increased QMI count year over year.
