December’s New Home Pending Sales Index shows that new home contracts are 12.5% stronger than last year when adjusting for supply and seasonality. 2019’s housing market ended on a positive note with nine of ten key markets growing year-over-year, capturing a strong rebound from the slow second half of 2018.
The Index shows a 117.5 for December, representing a 12.5% increase from December 2018. On a month-over-month basis, new home sales decreased by 2.5% between November and December 2019. The national index is 2.5% higher than December 2017.
Markets Driving The Increase In New Home Pending Sales
Los Angeles, San Francisco, and Seattle experienced the most significant growth compared to last year, up 33.4%, 32.4%, and 31.5%, respectively. Context is key, however. Sales in these three markets are lower than two years ago.
San Francisco and Orlando were the only markets to increase month-over-month in December.
Home sales in Denver and Houston are tracking just below their cycle-high. Both markets are up year-over-year and on a two-year basis.
“Looking ahead, a heated election year, slowing global growth, and housing affordability concerns will be top-of-mind for buyers,” said Ali Wolf, Director of Economic Research at Meyers Research. “There’s still a desire to own a home, especially for Millennials, but we need to keep our eyes on how confidence trends in the early-months of 2020.”
The Meyers Research New Home Pending Sales Index (PSI) is built on proprietary, industry-leading data that covers 60% of the production new home market across the United States. Reported number of new home pending contracts are gathered and analyzed each month. Released on the 15th business day of each month, the New Home PSI is a leading indicator of housing demand compared to closings because it is based on the number of signed contracts at a new home community. Meyers Research monitors 18,000 active communities in the country and the homes tracked can be in any stage of construction.
The New Home PSI 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 markets’ specific seasonality, removes outliers, and uses June 2016 as the base month.
The data provided in this release are for use only by the primary recipient or the primary recipient’s publication or broadcast. This data may not be modified, resold, republished or licensed to any other source, including publications and sources owned by the primary recipient’s parent company without prior written permission from Meyers Research.