New Home Sales Slip Month-Over-Month On Low Inventory, But Grew 36 Percent Year-Over-Year

Zonda released the New Home Pending Sales Index for December 2020, which shows pending sales decreased month-over-month but increased year-over-year across the U.S. 

The New Home PSI came in at 158.3 for December, representing a 36 percent increase from December 2019. On a month-over-month basis, new home sales fell by 3.6 percent compared to November. 

"We have every type of buyer engaged today, whether that's first-time, move-up, luxury, retiree, investor, second home and even relocation," saya Ali Wolf, chief economist at Zonda. "The seemingly universal interest combined with tight inventory is driving home prices up, but low mortgage rates are offsetting the impact for now."

The best new home markets in December were Jacksonville, Raleigh, and Atlanta, the same top three markets as last month. Builders in these markets benefit from the low interest rates and the work-from-home economy, as well as from the diverse labor markets, temperate climates and relative housing affordability. 

"When monitoring the new home market, one must understand the intricacies," says Wolf. "For example, community count is down 17 percent year-over-year nationally and some builders are intentionally only releasing a few homes for sale each month. These factors will naturally hold back sales without there being a fundamental shift in demand."