New-home sales slipped to their lowest level since 2023, dropping from “slightly overperforming” to “average” on Zonda’s proprietary New Home Pending Sale Index (PSI).
“If there’s one word to describe the new-home market today, it would be ‘fine,’” says Ali Wolf, chief economist at Zonda. “Traffic is low, and buyers lack any sense of urgency, but reasonable conversion rates show that serious buyers are still out and about.”
The defining characteristic of today’s housing market is its lack of uniformity. The index demonstrates this, with some markets seeing over 15% year-over-year growth while others have declined by the same margin. Variations in housing affordability, supply, labor market strength, and consumer confidence explain the locational differences.
Zonda’s new-home sales metric, which counts the number of new-home contract sales each month and accounts for cancellations and seasonality, shows that 649,967 new homes were sold in January at a seasonally adjusted annualized rate, a decline of 4.2% from last month and 11.3% from a year ago. On a nonseasonally adjusted basis, 53,956 homes were sold, 11.2% lower than last year and 4.4% below the same month in 2019.
Zonda’s PSI was created to help account for fluctuations in supply by combining both total sales volume and the average sales rate per month per community. The January PSI came in at 125.3, representing an 11.3% decline from the same month last year. The index is 28.1% below cycle highs. On a month-over-month basis, seasonally adjusted new-home sales decreased 5.9%.
Only two markets increased year over year: Cincinnati (+18.1%) and Baltimore (+2.1%). Cincinnati was up compared with last year but fell 2% month over month. Inversely, the metros that performed the worst year over year were San Francisco (-33.1%), Denver (-27.7%), and Las Vegas (-25.8%).
Orlando, Florida; Baltimore; and Minneapolis were the best-performing markets monthly. Orlando's sales increased 6.2% month over month.
