The New Home Pending Sales Index rose by 6.9% from August to September 2021, up to a reading of 152.5 for September. While this marks a 9.5% year-over-year decline from September 2020, the index stands 31.2% higher than in September 2019.
The housing market currently is below its peak activity level, down 12.4% on a seasonally adjusted basis, but it remains historically strong, up 22.4% from pre-pandemic highs in February 2020.
“September was the second month in a row where new-home sales rose month over month,” says Zonda chief economist Ali Wolf. “Buyers are showing resilience, with some of those on the sidelines starting to realize that housing has moved from scorching to simply hot and with that, the market is easier to navigate now than it was just six months ago.”
Out of the New Home PSI’s two components, the new-home orders component fell 24% year over year in September. According to Zonda, this stems from a falling average project count—a scarcity of inventory means a scarcity of total sales. The average sales rate per community, which captures how well homes are selling at extant communities, has fallen 7% year over year, due primarily to extremely strong sales success last year.
Pending home sales trend above September 2020 levels in six of the index’s 25 select markets, up from four last month. Twenty-three out of 25 markets saw an increase in home sales over the past month, with Minneapolis (-5.0%) and Las Vegas (-6.5%) as the only exceptions. All 25 markets showed a positive spread in their index components, indicating that current sales volume has been restrained by a lack of supply. “The majority of builders are still saying that they would sell more homes if they had more homes to sell,” says Wolf. “The difficulty in today’s environment is that building constraints are everywhere you look.”
Zonda anticipates negative YOY home sales data throughout the remainder of 2021, given tough comps with 2020’s outsized performance. Click here to view the full report.
