According to a recent MReport article, the U.S. Census Bureau reported that housing permits dropped 5.5% in the month of February. In addition, the report stated that housing starts fell 1.5% month-to-month. The U.S. Census reported that housing starts are still above where they were in February 2019. Housing completions fell 0.2% in February to 1.316 million, however they are still higher than February of 2019. First American’s Deputy Chief Economist Odeta Kushi said the year-over-year gains are “in our rearview mirror” as the impact of COVID-19 on consumer confidence and future home building remains to be seen. She also stated that while the most recent homebuilder confidence report is still encouraging, it is also beginning to show signs of downfall due to Coronavirus. There are concerns with the construction industry, particularly with supply-side disruptions and future demand. Kushi added, “The fundamentals, which drive new home sales remain—near record-low mortgage rates, a limited supply of existing homes for sale, and sturdy demand driven by millennials—a generation that is aging into the key lifestyle decisions which drive homeownership demand.”
Realtors.com’s Senior Economist George Ratiu stated that recent data on construction does not indicate a dramatic shift since the Coronavirus. “The massive measures being put in place in the second half of March to contain the spread of the coronavirus—social distancing, work from home policies, closures of restaurants, retail stores, libraries, and gatherings of over 50 people—are reverberating across the economic landscape,” he said. “With millions of Americans working and caring for families at home, housing is experiencing a noticeable contraction in foot traffic, which will translate into a sharp decline in home sales over the next few months. As homebuilders are likely to put projects on standby to protect their workers, construction activity can be expected to show a noticeable further slowdown in March and April.” Because the Coronavirus is rapidly impacting the U.S., the housing market may eventually suffer due to the outbreak. The virus could potentially damage the spring homebuying season because potential buyers may be reluctant to attend open houses.
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