Housing ‘Recovering,’ Key Indices Reveal
Home builders, residential remodelers, kitchen/bath dealers and other design professionals are all demonstrating signs of optimism for a stronger market through the balance of 2020, as the initial impact of the COVID-19 pandemic continues to recede. 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
In signs that housing continues to recover from the impact of COVID-19, builder confidence in the market for newly built single-family homes increased sharply, and single- and multi-family housing starts each posted solid gains, according to the National Association of Home Builders. “Housing has been a bright spot during the COVID-19 pandemic, and the sharp rebound in builder confidence has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020,” said NAHB Chief Economist Robert Dietz. Housing starts, according to the latest figures, were pegged at a seasonally adjusted annual rate of 1.5 million units, the highest rate since February. New-home sales have also risen to their highest level since the Great Recession, the NAHB reported.
After months of setbacks resulting from the coronavirus pandemic, most realtors believe that the existing-home sales market is “recovering,” the National Association of Realtors reported. According to a recent NAR survey, 92% of the real estate agents polled reported that a portion of their buyers have either returned to or never left the market. Thirty-five percent of surveyed NAR members also said that buyers have modified at least one home feature that’s important to them because of the coronavirus outbreak, noted Lawrence Yun, chief economist for the NAR. The most common home features cited as increasingly important are home offices, spaces to accommodate family members new to the residence and larger homes with more personal space. “A number of potential buyers noted stalled plans due to the pandemic and that has led to a pent-up demand to buy,” said Yun. “After being home for months, buyers are reminded how much their current home may lack certain desired features or amenities.”
Expenditures for improvements and repairs to owner-occupied homes are expected to slow by the middle of next year as the COVID-19 pandemic continues to unfold, according to the latest Leading Indicator of Remodeling Activity released by the Joint Center for Housing Studies of Harvard University. Assuming continued weakness in the economy due to the public-health crisis, the LIRA projects annual declines in renovation-and-repair spending of 0.4% by the second quarter of 2021. “The remodeling market was buoyed through the early months of the pandemic as owners spent a considerable amount of time at home and realized the need to update or reconfigure indoor and outdoor spaces for work, school, play, exercise and more,” said Chris Herbert, managing director of the Cambridge, MA-based Joint Center. “However, sharp declines in home sales and project permitting activity this spring, as well as record unemployment, suggest many homeowners will likely scale back plans for major renovations this year and next.” Annual expenditures by owners for home improvements and repairs are expected to shrink slightly, to $326 billion, by the middle of 2021, added Joint Center economist Abbe Will.