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After a solid start to the year, seasonally adjusted new-home sales cooled in both May and early June, according to the latest Zonda New Home Market Update.

The recent sales dip isn't linked to a single big event, reports Zonda. Rather, the housing data provider attributes the shift to persistently high housing costs, buyer fatigue, and cautiousness ahead of the election.

"The past four years have shown us a consistent underlying demand for housing. Demographics, evolving consumer preferences, and lifestyle shifts are creating a substantial pool of potential buyers," says Ali Wolf, chief economist for Zonda. "Housing affordability combined with outside factors like changes in Fed speak, presidential elections, and sensationalized news articles, however, can introduce choppiness into this fundamental demand, causing temporary fluctuations in buyer confidence and market activity."

May was the lowest month for builder confidence this year, according to Zonda's survey. Only 33% of home builders said demand was on track with expectations, down from 50% consistently since the start of 2024.

Importantly though, the new-home market still came in as slightly overperforming last month.

Zonda’s new-home sales metric, which accounts for both cancellations and seasonality, indicates there were 728,981 new homes sold in May on a seasonally adjusted annualized rate, 2.5% lower than April and 1.8% higher than a year ago. On a non-seasonally adjusted basis, 65,006 homes were sold, 3.3% higher than last year and 17% above the same month in 2019.

The Zonda New Home Pending Sales Index (PSI)—created to account for fluctuations in supply by combining total sales volume with the average sales rate per month per community—for May came in at 142.7, representing a 2.9% increase from the same month last year. On a month-over-month basis, seasonally adjusted new-home sales decreased 1.3%. The index is currently 18.1% below cycle highs, according to Zonda.

Minneapolis (+19.1%), Atlanta (+16.4%), and Sacramento (+15.3%) posted the strongest year-over-year increases, while sales were down year over year in nine of the select markets, led by Salt Lake City, Orlando, and Cincinnati. On a monthly basis, Baltimore, Sacramento, and Seattle were the best-performing markets.

In order to add further context to sales, Zonda created the Zonda Market Ranking (ZMR). The National ZMR index came in at 113.9 in May, indicating a slightly overperforming market. Among Zonda's top 50 major markets, 54% were overperforming, 32% were average, and 14% were underperforming.

Prices fell year over year across all price tiers. Prices were down 1.6% for entry-level to $333,081, 1.1% for move-up to $522,126, and 0.3% for high-end homes to $912,149. The declines represent smaller home sizes, differing locations, and select price drops, reports Zonda.

Of the builders surveyed by Zonda, 29% reported raising prices in May, down from 54% in April. Further, 57% reported holding prices flat, up from 39% last month. Incentives are still common, with 57% of new-home communities offering incentives in May, down from 58% last month.

There are currently 14,547 actively selling communities tracked by Zonda, up 3.1% from last year. On a month-over-month basis, the national figure slipped 2.6%. Total community count is 24.8% below the same month in 2019.

Dallas (+15.7%), Austin (+12.6%), and Salt Lake City (+11.3%) grew community count the most year over year, while the largest community count declines were in San Francisco (-22.2%), Los Angeles/OC (-17.8%), and Philadelphia (-16.2%).

National quick move-ins (QMIs) totaled 30,818, up 17.1% compared to last year and 4.7% higher month over month. Total QMIs are 50.9% above 2019 levels.

On a metro basis, 76% of Zonda's select markets increased QMI count year over year. The markets that grew the most were Cincinnati (+86.5%), Riverside/San Bernardino (+59.8%), and Orlando (+58.2%).

Sacramento, Jacksonville, and Las Vegas have seen the most growth in QMIs compared to the same time in 2019, up 238.5%, 237%, and 204.2%, respectively. QMIs are down the most compared to 2019 in Seattle (-57.6%), New York (-51.3%), and San Francisco (-47.2%).