New Home Sales Defy Gravity: Up 39.6% Year-Over-Year According To Meyers Research

COSTA MESA, Calif., Sept. 22, 2020 /PRNewswire-PRWeb/ -- Today, the experts at Meyers Research, the housing industry's foremost advisors, released the New Home Pending Sales Index (PSI) 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 United States. The index is a leading 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% increase from August 2019. On a month-over-month basis, new home sales rose by 3.0% 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," said 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. The economies in these markets have been rapidly improving from earlier this year and those employed are looking to lock in their monthly payment with today's low rates. In addition, these markets have been leaders in positive net migration for years and have only seen that trend grow as COVID-19 shifted priorities for many buyers. Furthermore, Austin has the highest population share of Millennials among top cities in the country and Raleigh is the sixth highest. Millennials are the number one home buyer today and are boosting local home sales.

"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% year-over-year in some markets," said Wolf. "All of the success comes with challenges, however, as builders look to replace sold lots and deal with supply-chain issues."

New home data 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 and removes outliers. The index is baselined to 100 for June 2016. Today's national New Home PSI is 63% above the base level.

The next Meyers Research New Home PSI press release, featuring September 2020 data, will be issued on Tuesday, October 22, 2020 at 9:00 a.m. ET.

Methodology
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 market represents roughly 10% of all transactions, allowing little movements in supply to cause outsized swings in market activity. As a result, the New Home PSI blends the cumulative sales of activity 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 foundation of the index is a monthly survey conducted by Meyers Research. It is necessary to monitor both new and existing home sales to establish an accurate picture of the relative health of the residential real estate market.

About Meyers Research
Meyers Research represents the housing industry's leading provider of rich data, backed by Zonda and Metrostudy, and the industry's top advisors for residential real estate development and new home construction. With products and services geared for homebuilders, multifamily developers, lenders, and financial institutions, we provide innovative solutions to maximize opportunities in today's real estate development landscape. To learn more, visit meyersresearchllc.com.

Meyers Research, Hanley Wood, Zonda, Metrostudy, and the company logo, are trademarks of Meyers Research, LLC and/or its subsidiaries.

 

SOURCE Meyers Research

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