By Vincent Salandro | Builder
The housing market has entered a “wait-and-see” phase, where consumers are deciding whether to buy today or wait, resulting in many potential shoppers moving to the sidelines. Consequently, new-home sales slowed in September, according to the latest Zonda New Home Market Update.
Zonda’s New Home Pending Sales Index (PSI), based on the number of new-home sales contracts signed across the country, had a reading of 113.2, representing a 25.9% decline from September 2021. The index is currently 35% below cycle highs and approximately 3% below its September 2019 level. On a month-over-month basis, seasonally adjusted new-home sales increased 5.9%.
According to Zonda, many builders are responding to the overall market uncertainty by pausing on new land deals and slowing overall starts. Zonda data indicates that 81% of builders intend to slow starts, if they have not already, for the rest of 2022, and nearly 89% of builders are planning to slow starts in 2023.
“We are on a quest to find what we’ll call the strike price—a price where consumers see the value in the home and/or community and reenter the market,” says Zonda chief economist Ali Wolf. “Right now, consumers are both uncomfortable with where prices are and, in many cases, unable to make the math work. Strategic price cuts and incentives are sometimes proving effective at pulling back in some of the skittish consumers. In other cases, the quest carries on.”
