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Even with mortgage rates holding above 7%, Zonda’s new-home sales metric shows there were 709,114 new homes sold in August on a seasonally adjusted annualized rate.

On a nonseasonally adjusted basis, 59,097 homes were sold, 27.6% higher than last year and 8.8% above the same month in 2019, according to Zonda’s New Home Market Update.

A gain of 0.6% from July and an increase of 25.6% from one year ago, overall sales held up better than expected, but seasonality and affordability challenges remain headwinds to the market.

“The tale of two housing markets persists,” says Ali Wolf, Zonda’s chief economist. “While the overall demand pool for housing is down given affordability constraints, new-home sales are up year over year as many builders have some inventory to sell and are willing to sweeten the deal for consumers with incentives. In contrast, resale sales are down year over year as the lack of inventory continues to plague the market.”

Zonda notes the relative resilience in the new-home market can be attributed to five main things:

  1. Limited quality competition from the resale market;
  2. The use of incentives by builders, especially mortgage rate buydowns;
  3. A narrowing of the price spread between new and existing homes;
  4. The growing share of cash buyers in the market is unfazed by rising rates; and
  5. A begrudging acceptance from consumers that low interest rates are a thing of the past.

Zonda’s New Home Pending Sales Index—created to account for fluctuations in supply by combining total sales volume with the average sales rate per month per community—came in at 145.6, representing a 37.1% increase from the same month last year. Currently, the index is 16.4% below cycle highs. On a month-over-month basis, seasonally adjusted new-home sales increased 1.6%.

Phoenix (+155.0%), Sacramento, California (+111.8%), and San Francisco (+70.8%) posted the best numbers relative to last year. The base effect of last year’s low levels is contributing to the large year-over-year percentage increases, Zonda notes. On a monthly basis, Cincinnati, Salt Lake City, and Sacramento were the best-performing markets.

The metros that performed the worst year over year were Jacksonville, Florida (-2%), Baltimore (+1.4%), and New York (+18.4%). Noting that the latter two markets are positive, every one of Zonda’s select markets posted a year-over-year gain except for Jacksonville.

National home prices increased year over year across all products, including 0.2% for entry-level to $340,203; 0.4% for move-up to $528,856; and 3.9% for high-end homes to $920,772. Supplementing data with a monthly builder survey from Zonda, 37% of builders reported raising prices in August, and 58% reported holding prices flat. The percentage of builders reporting price increases has slowed as seasonality kicks in and builders further evaluate the affordability backdrop, Zonda notes.

Unchanged monthly, 58% of new-home communities across the country were offering incentives in August. Up 0.2% from last year, there are 13,923 actively selling communities tracked by Zonda. On a month-over-month basis, the national figure slipped 1.9%. Total community count is 27.6% below the same month in 2019. The lack of competition from other new-home communities is allowing for some upward pressure on the average sales rate per month per community; Zonda defines a community as anywhere where five or more units are for sale.

Austin, Texas (+15.9%), Minneapolis (+14.4%), and Riverside/San Bernardino, California (+10%) grew community count the most year over year. Compared with 2019, community count is down 12% and 9% in Austin and Riverside/San Bernardino, respectively, but up 4% in Minneapolis. Community count fell the most in Tampa, Florida (-17.4%), Seattle (-16.9%), and Las Vegas (-15.0%) compared with last year. Year over year, community count fell in 92% of Zonda’s select markets and rose in 8%.

Down 9.4% compared with last year and 7% lower month over month, national quick move-ins (QMIs) totaled 26,312. Total QMIs are 80.5% above 2019 levels. Zonda reports that QMIs are selling out quicker than they can be replaced in many markets as consumers view these homes as a great alternative to the resale market given the deficiency of supply.

On a metro basis, 20% of Zonda's select markets increased QMI count year over year with Los Angeles/Orange County (+14.5%), Salt Lake City (+12.6%), and Las Vegas (+10.4%) growing the most. Compared with the same time in 2019, Las Vegas, Salt Lake City, and Phoenix have seen the most growth in QMIs, up 221.1%, 197.8%, and 110.6%, respectively. QMIs are down the most in three markets particularly limited by land and lot availability—Baltimore (-63%), New York (-59%), and San Francisco (-59%) compared with 2019.