An aerial view of a construction worker roofing an apartment on May 27, 2020 in Uniondale, New York.
Al Bello | fake pictures
To find a V-shaped recovery from the economic remnants of the coronavirus pandemic, look at the nation’s single-family home builders.
Homebuilders sentiment rose 14 points to 72 in July, according to the National Association of Home Builders / Wells Fargo Housing Market Index (HMI). That’s exactly where it was in March, before the pandemic hit the American economy. Anything above 50 is considered a positive feeling. The index plummeted to 30 in April.
“Builders are seeing heavy traffic and a lot of interest in new construction as inventory of existing homes remains low,” said NAHB President Chuck Fowke, a builder from Tampa, Florida. “Additionally, builders in the Northeast and Midwest are benefiting from the demand that was sidelined during the spring blockades. Low interest rates are also fueling demand, and we expect housing to lead an economic recovery. general”.
Mortgage rates have been setting new record lows almost weekly, and are unlikely to rise anytime soon. That has given buyers more purchasing power, especially for newly built homes, which are priced higher. Mortgage applications to buy a newly built home increased more than 50% in June annually.
Of the three components of the index, current sales conditions rose 16 points to 79, sales expectations for the next six months rose seven points to 75, and buyer traffic rose 15 points to 58.
Builders are clearly delighted that demand is growing again, but they are also surprised and largely unprepared. Most builders closed or severely restricted operations in March and April and are now struggling to catch up. They had stopped buying land and had fired much of their workforce. Material manufacturers did the same, which is why builders now face high lumber prices.
“Lumber prices are at a two-year high, and builders are reporting rising costs for other construction materials while problems with the availability of skilled and batch labor persist,” said Robert Dietz, economist. NAHB chief. “However, the important history of the changing geography of housing demand is benefiting new construction. Demand for new housing is improving in lower-density markets, including small metropolitan areas, rural markets, and large neighborhoods. metropolitans as people search for bigger houses and anticipate greater flexibility for teleworking for years to come. The flight to the suburbs is real. “
Regionally, builders sentiment in the Northeast increased 22 points to 70 and jumped 18 points to 68 in the Midwest. In the south it increased 10 points to 73 and in the west it jumped 14 points to 80.
.
