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Even as mortgage rates remain above 7%, September new-home sales only decreased modestly month over month, according to Zonda. Zonda’s new-home sales metric shows 708,457 new homes were sold in September at a seasonally adjusted annualized rate, just 0.2% lower than in August. The September estimate is also 33% higher than September 2022.

While mortgage rates did not significantly impact new-home sales in September, as they continue their climb toward 8%, Zonda projects the cooldown in sales to be more significant in future data releases.

“Dynamics are shifting in the housing market as affordability worsens,” says Zonda chief economist Ali Wolf. “It used to be easy to say the new-home market is outperforming the resale market and the East is outperforming the West. While both are still true, the discussion of today’s sales dynamics has been more market by market, builder by builder, product by product, and price point by price point specific.”

On a nonseasonally adjusted basis, 56,903 homes were sold in September, 35.1% higher than a year ago and 7.9% higher than the same month in 2019, according to Zonda’s New Home Market Update. While demand has been impacted by high mortgage rates, Zonda says the new-home cancellation rate is much lower than what was experienced in 2022’s third and fourth quarters.

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 146.0 in September, representing a 37.9% rise from the same month in 2022. The index is 16.2% below cycle highs and is 2.9% higher than the index reading in August.

Sacramento, California (+163.3%), Phoenix (+124.0%), and Las Vegas (91.0%) posted the strongest improvement on a year-over-year basis. Baltimore (-2.3%), Washington, D.C. (-1.5%), and Jacksonville, Florida (0%) were the worst performers compared with a year ago. Cincinnati, Philadelphia, and Jacksonville performed the strongest relative to August.

Zonda created the Zonda Market Ranking (ZMR) to add further context to its metro level analysis. The ZMR accounts for both sales pace and volume, is seasonally adjusted, and is taken as a percentage relative to a baseline market average using historical activity. Markets are placed into performance groups ranging from “significantly underperforming” to “significantly overperforming.”

The national ZMR in September was 117.2, indicating a slightly overperforming market. The metros overperforming their historical averages the most in September were Columbia, South Carolina; Chicago; and Fort Collins, Colorado. San Jose and Colorado Springs, Colorado, were the lone two markets analyzed that were significantly underperforming compared with historical averages. Among the top 50 markets analyzed, 68% were overperforming and 24% were average, according to Zonda.

According to Zonda, home prices increased across the entry-level, move-up, and high-end home categories on a year-over-year basis in September. Prices rose by less than 1% for both entry-level and move-up, while high-end home prices increased 3.7% to $931,107.

Thirty percent of builders reported raising prices in September, according to Zonda’s monthly builder survey. Nearly two-thirds of builders reported holding prices flat, up from 58% in August. The share of builders increasing prices is slowing as seasonality kicks in and builders further evaluate the affordability backdrop.

Builders are attempting to help the affordability equation by offering incentives to prospective buyers. Fifty-seven percent of new-home communities across the country were offering incentives in September, with either mortgage rate buydowns, funds toward closing costs, and flex dollars.

There are 13,980 actively selling communities tracked by Zonda, up 0.7% from the same period in 2022. Total community count is 27.4% below the same month in 2019. Zonda defines a community as anywhere where five or more units are for sale. Austin, Texas (+17%), Minneapolis (+13.4%), and Orlando, Florida (+10.6%) grew community count the most year over year, while community count fell the most in Tampa, Florida (-17.4%), Seattle (-15.5%), and San Francisco (-13.9%).

National quick move-ins (QMIs)—homes that can be occupied within 90 days—totaled 27,094, down 15.6% on a year-over-year basis and 7.1% on a month-over-month basis. Zonda says QMIs are selling quicker than they can be replaced in many markets, as consumers view these homes as a great alternative to the resale market. Riverside/San Bernardino, California; Salt Lake City; and Los Angeles/Orange County grew QMI count the most compared with last year.