The National Association of Homebuilders (NAHB) reports that as lockdown orders begin to lift, builders are responding by sticking firmly to home prices. Data taken from a recent survey shows that between May and June 2020, fewer home builders are lowering prices.
A recent survey found the share of builders that lowered prices in May fell to 15%—a sharp decline from the prior months’ 22%.
This data highlights positive forecasts for continued future recovery, of which housing may very likely be leading the charge. Statistics from the survey found that single-family permits rose nearly 12% during the month of May. As for mortgage applications, these reached their most impressive height this year to date, the previous height being reached in January 2020.
The real encouraging note is that among those surveyed according to data procured from the NAHB/Wells Fargo Housing Market Index (HMI), builder sentiment rose an impressive 21 points during the month of June alone. This jump in positive outlook marks the highest spike in builder sentiment throughout the entire time that the HMI has been in existence.
While there had been much whispering and worry revolving around the belief that the arrival of COVID-19 had brought with it the burden of builders having to slash home prices in order to simply survive, this recent HMI survey offers hope that the tides are turning and hope is in the air. Specifically, this past survey saw only a small portion—less than a quarter of all home builders nationwide—reduce their price tags for properties in April 2020. More good news followed soon after in May 2020, with even fewer home builders (a mere 15%) being forced to lower home prices in order to make ends meet.
Historically, builders during similar recessions have been forced to cut prices far more, such as in March 2008, when nearly half of home builders (49%) were forced to lower prices to adjust to the suffering economic times.