In light of coronavirus concerns, the housing market is starting to signal a minor downturn with a decrease in housing starts.
That said, more people are remodeling and new construction is up compared to this time last year.
That’s according to BuildFax’s latest Housing Health report, which showed that single-family housing authorizations decreased 7.21% month over month in February, signaling potential COVID-19 concerns.
“The broader economy is experiencing a volatile month as the stock market and general population react to the implications of COVID-19,” Managing Director of BuildFax, Jonathan Kanarek said. “Meanwhile, housing activity remains nearly unchanged from its growth trajectory thus far.”
And while housing starts declined in month-over-month activity, new housing supply is still strong, with year-over-year activity up 0.24%.
Meanwhile, existing housing activity – or home maintenance and remodeling – grew increasingly in February.
Existing maintenance volume and spend increased by 6.2% and 16.83% year over year, respectively, according to the report. Additionally, remodel volume and spend, which is maintenance that includes renovations, additions, and alterations, increased 5.42% and 13.92% year over year, respectively.
These increases in construction are also reflected in the latest jobs report, which showed a 3.25% increase in residential building jobs over last month. The rise in construction jobs with low mortgage rates may help counterbalance any short-term economic downturn that could be spurred by COVID-19 concerns and tightening housing stock, already short 3.3. million homes.
According to Freddie Mac, America’s housing market is undersupplied by 3.3 million units, and the shortage is getting worse every year.
“However, COVID-19 is rapidly unfolding in the U.S. and the housing market may eventually feel the weight of this outbreak,” Kanarek continued. “For instance, the virus may dampen spring homebuying season this year as prospective buyers could feel reluctant to attend open houses. Additionally, quarantines may lead to declines in construction work, the already strained U.S. housing supply may continue to tighten.”
