COVID-19 has hit the housing market, to literally no one’s surprise. Housing starts plummeted 30.2% in April as our globe struggled with how to social distance and survive an economic shut down. Home building activity hit a five-year low, according to the U.S. Commerce Department. <\/p>\n
Compared to April 2019, housing starts dipped 29.7% across all four regions, despite many states allowing builder activity to continue as “essential” during stay-at-home orders sidelined many. During the same period, permits for housing fell 21%. <\/p>\n
Starts didn’t fall for lack of trying, rather supply chain interruptions that we suspect will continue into the summer during this adjustment phase of reopening the economy. <\/p>\n
May will likely continue the trend of restricted building activity. Most economists expect a widespread contraction in the second quarter. Housing alone isn’t braced for impact, rather combining that with a hit to the gross domestic product (GDP) as consumer spending and business investment continue to retract. <\/p>\n
One silver lining is that despite this negative news, new home construction didn’t decline nearly as sharply as various other sectors of the American economy, a hopeful sign for the market. <\/p>\n
Further, on the “relatively low level of single family starts and completions,” the The Calculated Risk<\/a> blog calls this period the “wide bottom,” as they forecast “following the recession, and now I expect some further increases in single family starts and completions once the crisis abates.” <\/p>\n