The U.S. Census Bureau revealed that U.S. housing data fell off the cliff during March, with permits, starts, and completions all recorded declines.
Housing permits fell 6.8% from February to 1.35 million, housing completions were down 6.1% monthly to 1.22 million, and housing starts recorded a 22.3% decline from February to 1.21 million.
Every region in the nation posted declines in permits, with the largest drop being the 12.7% drop in the midwest. The northeast posted a 32.5% decline in housing starts from February to March.
Realtor.com’s Senior Economist George Ratiu said the COVID-19 pandemic expands in the U.S., “economic activity has been encased in a block of ice.”
“With consumers confined at home in most states, housing markets are feeling the chill,” he said.
Odeta Kushi, First American’s Deputy Chief Economist Odeta Kushi said the recent National Association of Homebuilders homebuilder survey posted its largest one-month decline on record, as all three components fell: expected future sales, present sales, and buyer traffic.
“Prior to the pandemic, builders were already faced with several supply-side headwinds: increasing material costs, a chronic lack of construction workers, a dearth of buildable lots, and restrictive regulatory requirements in many markets,” Kushi said.
Kushi added builders must also grapple with temporarily reduced demand from a struggling labor market and shelter-in-place orders.
“March’s housing starts data reveals the early signs of the impact that the COVID-19 pandemic is having on the new home market and confirms the hesitancy on the part of builders, as housing permits, starts, and completions fell on a month-over-month basis,” she said.
Kushi, however, noted that once health fears subside the market will slowly climb.
“The industry will continue to deal with the job losses, tightened credit, and economic damage, but the fundamentals that drive new home sales—near record-low mortgage rates, a limited supply of existing homes for sale, and sturdy demand driven by millennials aging into homeownership, will begin to boost the market once more,” Kushi said.
In addition to the Bureau’s report, BuildFax’s Housing Health Report for March found single-family authorizations fell 2.7% from February to March, which is the second-consecutive decline related to the impact of COVID-19.
Also, the existing maintenance volume and spend fell 7.99% monthly and 7.71% year-over-year.
“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.”