COVID-19’s impact on the housing market became apparent in March with pending new home sales down 33% month-over-month.
The Index came in at 82.1 for March, representing a 23.9% decrease from March 2019. On a month-over-month basis, new home sales fell by 33.1% between February and March 2020.
New Home Pending Sales Index For Select Markets
Pending new homes sales posted a drop on a year-over-year and month-over-month basis for all of the select markets. Given the reversal in trend mid-spring selling season, looking at the month-over-month change is more valuable today.
Houston, San Francisco, and Los Angeles posted the largest drops month-over-month in pending new home sales.
The trend in Houston is unsurprising as the local housing market deals with the one-two punch of COVID-19 and a battered energy sector.
Unease around shelter-in-place orders as well as confusion about what activities could continue contributed to the larger than average drops in San Francisco and Los Angeles.
“The housing market is dependent on the labor market, and today, the number of Americans that are furloughed or permanently laid off are at record levels,” said Wolf. “Even still, we are finding builders are pleasantly surprised to learn that homes sales are still happening, just at a far slower pace.”
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.