National new home sales up compared to last fall

New home markets categorized by performance. | Source: Zonda

New home sales were slow nationwide in October but were up in comparison to October 2022. According to Zonda, new home sales were at 656,766 in October on a seasonally adjusted annualized rate, down 2.1% from September, but up 29.4% compared to this time last year.             

“The story for the majority of October, was that 8% interest rates were dampening demand as the ‘higher for longer’ economic narrative took hold,” said Ali Wolf, chief economist for Zonda. “Starting in November, however, a series of slower and/or improving economic data points including the jobs report, stats on manufacturing and inflation have shifted the narrative again, allowing for a modest reprieve in mortgage rates.” 

The National Zonda Market Ranking (ZMR) index came in at 112.6 in October, indicating a slightly overperforming new home market. The ZMR accounts for both sales pace and volume, is seasonally adjusted, and is taken as a percentage relative to a baseline market average. Based on the percentage above or below the baseline, markets are bucketed into performance groups ranging from significantly underperforming to significantly overperforming relative to historical activity. 

Among Zonda’s top 50 metro markets, 54% were overperforming, 30% were average and 16% were underperforming. Last month, 68% were overperforming, 24% were average and 8% were underperforming. 

When it comes to Zonda’s New Home Pending Sales Index (PSI) on a month-over-month basis, seasonally adjusted new home sales decreased 1.6%.  

The markets that posted the best increase on the PSI index relative to last year were Phoenix (+168.5%), Sacramento (+139.1%) and Las Vegas (+115.5%). These markets slowed dramatically last year but have since stabilized, according to Zonda. The base effect of last year’s low levels is contributing to the large year-over-year percentages. 

While Zonda notes that no markets were down year-over-year, the metros that performed the worst were Baltimore (+3.3%), New York (+6.4%) and Washington, DC (+10.6%).  

On a monthly basis for October, Denver (+12.7%), Minneapolis (12.7%) and Phoenix (7.3) were the best-performing metros.