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New-home sales continue to “defy gravity,” according to the latest New Home Pending Sales Index (PSI) from Meyers Research for August, backed by data from Zonda and Metrostudy. The index is a leading residential real estate indicator based on the number of new-home sales contracts signed across the country.

The New Home PSI grew to 163.3 last month, showing a 3% month-over-month increase and a 39.6% year-over-year increase. In April and May, the strength of the housing market varied depending on geography, but today nearly every market across the country is enjoying robust new home sales, states the report.

“Home prices are reaching new highs, but, thanks to today's mortgage rates, demand hasn't skipped a beat,” says Ali Wolf, chief economist at Meyers Research. “The housing market continues to be the standout sector of the entire economy.”

The top three new-home markets in the August report were Austin, Texas, Raleigh, North Carolina, and Tampa, Florida. The success in these markets is driven by rapidly improving economies, positive net migration, and a large millennial share of the total population. Jacksonville, Florida, and Denver round out the top five, with sales growth up 50% year over year.

“Builders expected 2020 to be a good year for housing, but not even the most brilliant of forecasters could have predicted sales in August to be up over 50% year over year in some markets,” continues Wolf.

However, activity in New York is still down year over year, but posted a month-over-month increase for the fourth consecutive month. While the market is down, builders offering product in the suburbs below the local FHA loan limit are selling homes at exceptional rates.