Builders had another blockbuster month in July. Our New Home Pending Sales Index captured a 32.7% increase in contract sales compared to last year and a 5.3% increase month-over-month. July’s data highlights that the strength of the housing market is carrying on later in the year than the typical seasonality.
New Home Pending Sales Index For Select Markets
Pending new home sales trended above July 2019 levels in nearly every top market across the country.
The best new home markets in July were Denver, Salt Lake City, and Raleigh. Each of these markets have resale inventory of between 35% and 55% compared to last year and rapidly rebounding economies.
In Salt Lake City, for example, we calculate that the unemployment rate in July, which will be released later this month for local markets, could be as low as 5%. For reference, the national unemployment rate is roughly 10%.
The Los Angeles metro moved positive on a year-over-year basis in July. Falling mortgage rates have an outsized impact on higher-cost metros and Los Angeles was a clear beneficiary of that last month.
Activity in New York is still down year-over-year but has posted a month-over-month increase for the third consecutive month.
"Builders are raising prices today to temper the demand," said Ali Wolf, Chief Economist at Meyers Research. "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."
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.