Home Activity Falls in March

Single-family housing authorization fell 2.7% month-over-month in March—the second-consecutive decline related to COVD-19, according to BuildFax. 

Despite the monthly drop, housing authorization grew 6.62% annually. 

“This increase might be an effect of pre-pandemic behaviors as the majority of the U.S. population was not under statewide shelter-in-place orders until the end of March.1 Additionally, while year-over-year increases in new construction may seem substantial, this is relative to the 2019 housing slump,” BuildFax’s Housing Health Report stated.  

The existing-housing activity also fell in March after a strong start to the year. Maintenance volume and spending decreased by 7.99% and 7.71% annually, respectively. Remodel volume and spending—a subset of maintenance that includes renovations, additions, and alterations—fell 11.5% and 9.23% annually, respectively. 

“The biggest unknown we’re facing in the housing market right now is how the COVID-19 recovery will play out. This outcome relies heavily on the political and social decisions made over the next few months,” said Jonathan Kanarek, Managing Director, BuildFax. “Beyond that, while construction employment was one of the hardest-hit sectors, it will also be one of the most important factors to aid economic recovery. In fact, prior to the outbreak, demand for new homes was so high we were facing a major housing shortage and the housing industry was gearing up for a strong spring homebuying season. While COVID-19 will dampen that enthusiasm in the short term, we are expecting to see a strong showing when shelter-in-place orders are lifted.”

The U.S. Census Bureau reported that housing starts, permits, and completions dropped significantly in April. The month saw housing permits fall by 20.8%; housing starts declined by 30.2%, and completions fell by 8.1% for the month.

Housing starts fell 43.6% in the northeast month-over-month and the west reported a 43.4% decline from March. The number of homes completed fell annually by 11.8%. 

Holden Lewis, Home and Mortgage Specialist at NerdWallet, said April’s drop is associated with the uncertainty of whether or not buyers will return to the market later this year.

“On top of that, they have to guess about the availability of construction workers in the next few months. This will exacerbate the housing shortage that many places suffer from. With fewer houses being built, there will be less opportunity for today's homeowners to move up and sell to first-time buyers,” he said.