In April, the new-home market hit continued roadblocks as consumers continue to pause and housing affordability is stretched, according to Zonda’s New Home Market Update (NHMU).
New-home sales climbed 2.6% compared to March and were effectively flat compared to last year. Zonda’s new-home metric shows there were 720,924 new homes sold in April on a seasonally adjusted annualized rate. On a non-seasonally adjusted basis, 64,256 homes were sold, 0.6% higher than last year and 11.2% above the same month in 2019.
“Builders expected more out of this year’s spring selling season, but macroeconomic headwinds got in the way,” says Ali Wolf, chief economist for Zonda and NewHomeSource. “Higher-than-expected mortgage rates, rising gas prices, incentive fatigue, and broader economic uncertainty have combined to hold sales flat.”
Zonda’s New Home Pending Sales Index (PSI), which accounts for fluctuations in supply by combining both total sales volume with the average sales rate per month per community, was 136.3, representing a 1.7% rise from the same month last year. The index is currently 21.7% below cycle highs and on a month-over-month basis, seasonally adjusted new-home sales increased 1.8%.
The markets that posted the best numbers relative to last year were San Francisco (+31.6%), Sacramento (+13.1%), and Atlanta (+12.5%). San Francisco was up compared to last year and flat month-over-month, Zonda notes.
National home prices increased 3.9% year-over-year for high-end homes but fell elsewhere. Prices were down 3.0% for entry-level to $318,040 and 0.9% for move-up to $513,354. Zonda says the rise in high-end home prices reflects new communities opening at higher price points, improvements in design quality, larger lots and home sizes, and/or better locations.
In April, 61% of new-home communities offered incentives on to-be-built homes and 78% on quick move-in supply. These are only publicly available incentives so will underrepresent overall usage, Zonda points out.
The Zonda Market Rating, which accounts for both sales pace and volume, indicates an “average” market nationally compared to historical performance. Across Zonda’s top 50 major markets, 34% were “overperforming,” 32% were “average,” and 34% were “underperforming.”
National quick move-ins (QMIs) totaled 33,068 in April, down 1.5% compared to last year and 4.5% lower month over month. Total QMIs are 70.7% above 2019 levels. For many consumers, QMIs provide a great alternative to resale supply given they are brand new and (often) come with builder incentives. However, these are not moving as fast as they once did, Zonda says, so the decline in supply is intentional as builders balance starts with sales.
On a metro basis, 52% of Zonda’s select markets increased QMI count year over year. The markets that increased the most were Philadelphia (+47.4%), San Francisco (+38.9%), and Cincinnati (+26.4%). Compared to 2019, Sacramento, Cincinnati, and Jacksonville have seen the most growth in QMIs, up 335.7%, 225.8%, and 220.1%, respectively.
