
Buyer confidence and new-home sales have tempered after a solid start to the year, according to Zonda’s New Home Market Update for June. The presidential election, changes in Fed policy, and low housing affordability have all weighed on consumer confidence in the summer months.
“Securing home sales today still doesn’t feel easy,” says Zonda chief economist Ali Wolf. “Traffic is down in many communities as some buyers find the barriers to entry insurmountable. Builders are doing their best to respond; we’re seeing an increase in both the dollar amount of incentives offered and the aggressiveness of mortgage rate buydowns.”
Zonda’s new home metric, which counts the number of new home contract sales each month and accounts for seasonality and cancellations, indicates 725,895 new homes were sold in June on a seasonally adjusted annualized rate. The estimate is flat from May but 3.7% higher than June 2023. On a non-seasonally adjusted basis, 61,677 homes were sold, 3.7% than last year and 10.3% higher than the same month in 2019.
The Zonda 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, registered a reading of 147.1 in June, a 2.8% rise from the previous month. On a month-over-month basis, seasonally adjusted new home sales increased 5.8% due to June historically being a slower month of the year, according to Zonda. The index is 15.5% below cycle highs.
Las Vegas (+15.9%), Minneapolis (15.5%), and Baltimore (+14.9%) posted the highest year-over-year increases in PSI, while sales were down year-over-year in 11 markets, including Los Angeles, Dallas, and Jacksonville, Florida. On a monthly basis, the PSI increased the most for Los Vegas, Minneapolis, and Tampa, Florida.
The Zonda Market Ranking (ZMR), which accounts for both sales pace and volume, is seasonally adjusted, and is taken as a percentage relative to a baseline market average, came in at 116.2 in June. The June ZMR indicates a slightly overperforming market. Among Zonda’s top 50 major markets, 58% were overperforming, 22% were average, and 20% were underperforming compared to historical levels.
The entry-level and move-up markets experienced home price compression in June, while prices increased in the high-end market. Prices fell 1.7% to an average of $332,903 for the entry-level market and 0.5% to an average of $523,902 in the move-up market. Prices increased 0.9% to an average of $916,813 in the high-end market. Zonda says the declines for the entry-level and move-up market represent a mix of price drops, smaller home sizes, and differing locations.
Of builders surveyed by Zonda, 18% reported raising prices in June, down from 29% in May. Additionally, 69% reported holding prices flat, up from 57% in the previous month. Fifty-eight percent of new home communities across the country offered incentives in June, the same as the previous month. Zonda’s survey indicates 84% of builders were willing and able to buy down mortgage interest rates to the mid-to-high 5%s.
Zonda’s count of actively selling communities—defined as anywhere with five or more units for sale—increased 3.7% year-over-year to 14,612 in June. Total community count is 24.5% below the same month in 2019. Zonda says the lack of competition from other new-home communities has allowed the average sales rate per month per community to hold up better.
Dallas (+16.5%), Atlanta (+10.1%), and Salt Lake City (+9.7) grew community count the most on a year-over-year basis, while San Francisco (-20.0%), Los Angeles/Orange County (-16.2%), and Philadelphia (-14.4%), experienced the biggest community count declines.
National quick move-ins (QMI)—defined as homes that can likely be occupied within 90 days—totaled 29,390 in June, up 11.5% compared to last year but 9.4% lower than May levels. Many builders have pivoted to a more spec-heavy strategy to capture buyers looking for options comparable to resale homes.
On a metro basis, 60% of Zonda’s select markets increased QMI count year-over-year, led by Cincinnati (+67.7%), Orlando (+38.4%), and Houston (+29.0%).
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