New Home Sales Up 39.6 Percent Year-Over-Year
Meyers Research released the New Home Pending Sales Index for August 2020. The New Home PSI, backed by data from Zonda and Metrostudy, shows pending sales increased month-over-month and year-over-year across the U.S. The index is a residential real estate indicator based on the number of new home sales contracts signed across the country.
The New Home PSI came in at 163.3 for August, representing a 39.6 percent increase from August 2019. On a month-over-month basis, new home sales rose by 3 percent from July. August's data continues to highlight that the strength of the housing market is carrying on later in the year than the typical seasonality.
"Home prices are reaching new highs but thanks to today's mortgage rates, demand hasn't skipped a beat," says Ali Wolf, chief economist at Meyers Research. "The housing market continues to be the standout sector of the entire economy."
Pending new home sales trended above August 2019 levels in nearly every top market across the country. Activity in New York is still down year-over-year but has posted a month-over-month increase for the fourth consecutive month. The best new home markets in August were Austin, Raleigh, and Tampa.
"Builders expected 2020 to be a good year for housing, but not even the most brilliant of forecasters could have predicted sales in August to be up over 50 percent year-over-year in some markets," says Wolf. "All of the success comes with challenges, however, as builders look to replace sold lots and deal with supply-chain issues."
Meyers Research normalizes 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 and removes outliers. The index is baselined to 100 for June 2016. Today's national New Home PSI is 63 percent above the base level.