February’s New Home Pending Sales Index shows that new home contracts are 16.4% stronger than last year and 8.1% higher than two years ago when adjusting for supply and seasonality. February’s data captures the demand for housing heading into the increased period of uncertainty around COVID-19.
The Index came in at 122.7 for February, representing a 16.4% increase from February 2019. On a month-over-month basis, new home sales increased by 3.6% between January and February 2020.
Markets Driving The Increase In New Home Pending Sales
Eight of the 10 key markets grew on a month-over-month basis, led by Atlanta.
New home pending sales in Phoenix are up a strong 21.0% compared to two years ago, which highlights the strength of the market heading into March, the start of the particularly uncertain period brought on by COVID-19.
Houston, a market vulnerable to the recent dramatic drop in oil prices, was experiencing robust housing demand last month, up 12.1% year-over-year and 8.5% compared to February 2018.
The strong annual clip for Los Angeles and San Francisco is less robust when put in context. Both markets are lower compared to two years ago, with Los Angeles sales 11.7% below February 2018 and San Francisco down 22.1%.
“The February data captures housing activity ahead of the increased uncertainty around COVID-19.” said Wolf. “With containment measures increasing by the day, traffic in the new home market is expected to slow in the coming weeks. Even still, the recent trend for housing captures strong demand that will likely rebound quickly when the coronavirus recedes.”
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.