
The combination of the election, anticipated future rate cuts, mortgage rate volatility, and housing affordability challenges had more consumers on the sidelines than normal this year, but following the election, buyers began to emerge.
New-home sales hit their highest level in seven months, totaling 740,636 on a seasonally adjusted annualized rate, which was a gain of 3.1% from October and an increase of 15.7% from a year ago. November sales activity of 54,574 homes was 17.8% higher than last year and 13.8% above 2019 levels on a non-seasonally adjusted basis, according to Zonda’s New Home Market Update report.
“There’s no denying that incentives helped drive new home sales in November, especially for larger builders,” says Ali Wolf, chief economist at Zonda. “Our data captured that 75% of all new home projects were offering some kind of incentive on quick move-in supply. The important difference seen in November, though, was a lift in consumer confidence. The election was over – it was time to move on.”
The New Home Pending Sales Index (PSI)—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 149.9, representing a 17.3% rise from the same month last year. Although the index is currently 13.9% below cycle highs, on a month-over-month basis, seasonally adjusted new home sales increased 5.3%.
The best numbers compared to last year were seen in New York (+68.0%), Baltimore (+66.7%), and Seattle (+65.3%). In contrast, the metros that performed the worst year-over-year were San Francisco (-52.3%), Tampa (-13.9%), and Philadelphia (-8.5%). Baltimore, Seattle, and New York were also the best performing markets on a monthly basis. Baltimore increased 81.9% relative to last month.
To add further context on the metro level, the Zonda Market Ranking (ZMR) was created. The National ZMR index came in at 119.3 in November, indicating a slightly overperforming market, ranking in line with last month but better than last year (average). Zonda’s snapshot markets were split between 80% overperforming and 20% average. None were underperforming in November. Among Zonda’s top 50 major markets, 70% were overperforming, 20% were average, and 10% were underperforming.
According to Zonda, national home prices increased 0.4% year-over-year for high-end homes to $913,999. Prices fell 2.2% for entry-level to $327,682 and 1.3% for move-up to $517,479. The entry-level and move-up declines represent a mix of select price drops, smaller home sizes, and differing locations.
Supplementing with a monthly builder survey, 23% of builders lowered prices in November, 68% held prices flat, and 9% raised prices. In October, for comparison, 18% of builders lowered prices month over month, 69% held prices flat, and 13% increased prices.
Incentives are still common in today’s housing market. In November, 58% of new home communities offered incentives on to-be-built homes and 75% on quick move-in supply.
Currently, there are 15,330 actively selling communities tracked by Zonda, up 6.0% from last year. On a month-over-month basis, the national figure grew 0.2%. Total community count is 20.0% below the same month in 2019.
Dallas (+15.1%), Tampa (+14.9%), and Baltimore (+11.1%) grew community count the most year-over-year. Compared to last year, the biggest community count declines were in San Francisco (-22.7%), Philadelphia (-18.9%), and Los Angeles/OC (-18.2%).
National quick move-ins (QMIs), or homes that can likely be occupied within 90 days, totaled 31,346, up 6.2% compared to last year but 8.8% lower month-over-month. Total QMIs are 41.1% above 2019 levels.
On a metro basis, 56% of Zonda's select markets increased QMI count year-over-year. The markets that grew the most year-over-year were Charlotte (+56.8%), Seattle (+31.2%), and Salt Lake City (+21.1%). Salt Lake City, Cincinnati, and Phoenix have seen the most growth in QMIs compared to the same time in 2019, up 216.3%, 180.8%, and 163.9%, respectively.