COVID-19 Impact Rocks Industry
What began as a promising year for housing has swiftly become fraught with uncertainty as the growing impact of the coronavirus outbreak continues to shake the economic footings of the housing market, including the kitchen/bath sector (see story, Page 14). Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were the following:
HOUSING STARTS & NEW-HOME SALES
The National Association of Home Builders has made “significant” downward forecast revisions for housing starts and home sales due to the growing “pause” of the U.S. economy in the face of the coronavirus outbreak. Although housing opened 2020 on positive footing, the impact of the COVID-19 pandemic has resulted in a forecast for a minus 11% GDP growth rate for the second quarter of 2020, the NAHB said, adding that the third quarter is also likely to post a negative growth rate. “While concern is still growing, it’s important to keep in mind that the crisis will eventually end and with that, economic healing will progress,” the NAHB noted. “While we are forecasting declines for housing construction on net in 2020…with low interest rates and policy help for the labor market, housing clearly would be a sector to lead the economy into recovery after the declines of 2020.”
The market for existing-home sales opened 2020 in a positive trajectory, but the coronavirus outbreak “has undoubtedly slowed buyer traffic and it is difficult to predict what short-term effects the pandemic will have on future sales,” the chief economist for the National Association of Realtors said last month. According to Lawrence Yun of the Washington, DC-based NAR, recent home-sales figures, while encouraging, were not reflective of the hit the economy is expected to take due to the coronavirus. Prior to the virus’ outbreak, existing home sales – fueled by historically low interest rates and rising demand – had hit a 13-year high. “Unfortunately, this will mark the high-water mark for some time,” Yun said, adding that “once social-distancing and quarantine measures are relaxed, we should see this temporary pause evaporate [and] potential buyers return with the same enthusiasm.”
Domestic shipments of major home appliances fell once again in February, continuing their pattern of declines, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that February appliance shipments totaled 5.17 million units, down 7.5% from the 5.60 million units shipped in February of 2019, AHAM reported. Year-to-date shipments through February were off 9.1% compared to the same two-month period in 2019. Shipments are expected to be impacted further as the effects of the coronavirus outbreak spread.