The latest New Home Pending Sales Index (PSI) from Meyers Research for July, backed by data from Zonda and Metrostudy, continues to show month-over-month and year-over-year pending sales on the rise across the nation. The index is a leading residential real estate indicator based on the number of new-home sales contracts signed across the country.

In July, the New Home PSI came in at 150, a 32.7% increase from July 2019. New-home sales month over month increased by 5.3% from June. According to the report, July’s data shows that the selling season continues to carry on later in the year than the typical seasonality.

“The new-home market has everything going for it right now, including limited resale supply, fear of missing out, heightened dissatisfaction of our current living situation, low mortgage rates, months of saving money, and increased demand from key demographic cohorts,” says Ali Wolf, chief economist at Meyers Research.

Pending new-home sales trended above July 2019 levels in nearly every top market. Activity in New York is still down year over year; however, the metro posted a month-over-month increase for the third consecutive month.

The top new-home markets in July, according to Meyers Research, were Denver, Salt Lake City, and Raleigh, N.C. These markets have resale inventory off between 35% and 55% compared with 2019 and rebounding economies.

“Builders are raising prices today to temper the demand,” says Wolf. “The higher prices are not acting as a deterrent for buyers right now, but we are keeping our eyes on affordability challenges down the road.”

New-home data is susceptible to outsized swings in contract activity based on shifts in the number of actively selling communities. As a result, Meyers Research normalizes the data to ensure consistency across the index. The New Home PSI blends the cumulative sales of active or recently sold-out projects with the average sales rate per community, which adjusts for fluctuations in supply. Furthermore, the New Home PSI is seasonally adjusted based on each market's specific seasonality and removes outliers. The index is baselined to 100 for June 2016. Today’s national New Home PSI is 50% above the base level.