Zonda: New Home Market ‘Treading Water’

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The market for new homes is “treading water,” according to a new report from Zonda, Newport Beach, Calif.

“The July housing market was challenging for new home builders,” the firm’s New Home Market Update said, noting sales declined 1.4% month-over-month and 1.1% year-over-year, “despite builders’ ongoing efforts to stimulate demand through incentives and pricing adjustments.”

The report said the share of major markets underperforming their historical average increased from 47% to 51% month-over-month per our Zonda Market Ranking, while entry-level and move-up home prices edged lower from a year ago. Mortgage rates fluctuated between 6.6% and 6.9%, adding another layer of uncertainty for buyers.

“The housing market remains in wait-and-see mode,” said Ali Wolf, chief economist for Zonda. “Consumers still want to buy homes, but uncertainty is making them more cautious. Mortgage rate volatility, geopolitical tensions, the approaching midterm elections, and concerns about AI’s impact on the labor market continue to weigh on confidence. Until affordability improves or confidence returns, the market is likely to keep treading water.”

One encouraging story came from the market’s supply side. Active community count increased 5% from a year ago, and relatively few builders report carrying excessive inventory anymore. “Builders remain focused on controlling what they can by emphasizing value,” the report said. “For payment-sensitive buyers, that means leveraging financing tools, right-sizing floor plans, and offering homes with lower spec levels to keep costs and monthly payments more manageable. For buyers less constrained by monthly costs, the focus remains on delivering the best product, location, and lifestyle for the money.”