Aerial view of a construction worker covering an apartment building on May 27, 2020 in Uniondale, New York.
Al Bello | Getty Images
To find a V-shaped recovery from the economic wreck of the coronavirus pandemic, look at the country’s single-family home builders.
Homebuilder sentiment jumped 1
“Builders see a lot of traffic and a lot of interest in new construction because existing home furnishings remain lean,” said NAHB President Chuck Fowke, a builder from Tampa, Florida. “In addition, builders in the Northeast and Midwest have benefited from demand that was put in place during spring closures. Low interest rates are also driving demand and we expect housing to lead to an overall economic recovery.”
Mortgage rates have set new record lows almost every week, and it is unlikely that they will soon grow higher. This has given buyers more purchasing power, especially for newly built homes that have a price premium. Mortgage applications to buy a newly built home increased over 50% in June annually.
Of the three components of the index, current sales conditions jumped by 16 points to 79, sales expectations over the next six months rose by seven points to 75 and purchasing traffic rose by 15 points to 58.
Builders are clearly happy that demand is growing back, but they are also surprised and largely unprepared. Most builders either closed or severely restricted operations in March and April and are now struggling to get back up. They had stopped buying land and had given up much of their labor. Material manufacturers did the same, which is why builders are now facing rising prices for wood.
“Wood prices are two years high and builders are reporting rising costs for other building materials, while problems with a lot of access to labor and skilled labor remain,” said Robert Dietz, NAHB’s chief economist. “However, the important history of the changing geography for housing demand benefits new construction. New housing demand is improving in lower density markets, including small metro areas, rural markets and large suburban suburbs, as people seek larger housing and expect more flexibility for telecommunications work. in the coming years. Flights to the suburbs are real. “
Building sentiment in the Northeast regularly 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.