NAHB Chief Economist Robert Dietz provides the latest weekly economic analysis on the effects of the COVID-19 pandemic:

Housing data was in focus this week, with April readings showing market impacts from government-imposed shutdowns intended to facilitate virus mitigation. While those impacts were strongly negative, the realized declines have been relatively smaller in the housing industry than initially forecasted.

Moreover, the notable resiliency of housing demand amid historic job losses is an indicator of the potential of the housing sector to help lead the economy in an eventual rebound. While challenges still lie ahead — particularly the possibility for a large, second outbreak of the virus in the fall — the designation of home construction as an essential industry combined with the reopening of major portions of the U.S. economy sets the stage for improving data for the housing sector in the months ahead.

The benchmark measure of builder confidence, the NAHB/Wells Fargo Housing Market Index (HMI), rebounded in May, increasing seven points to a still negative reading of 37. The gain in May nonetheless pointed to improvements for housing starts ahead, with April being a low point for the current recession.

Single-family starts were down 25% in April from March, declining to an annualized rate of 650,000. The April level marks the slowest annualized pace since 2015 and is off 37% since the strong rate recorded in February. The strength of the early 2020 data means that even with recent declines, single-family starts remain 1% higher for the first four months of the year compared to the first four month of 2019.

The NAHB Multifamily Production Index (MPI) showed a 22-point drop in the first quarter, falling to a negative reading of 27. This reading of the MPI is consistent with declines for the multifamily forecast as job losses mount. Indeed, multifamily starts declined 40.5% in April to a 241,000 annualized rate. This represents a 62% decline from the peak January rate. A recovery for apartment construction will depend on the pace of job restoration as economies reopen.

Existing home sales, as estimated by the National Association of Realtors, experienced the largest decline in 10 years. Despite being down 18% in April relative to March, current inventory remains tight, with only a 4.1-months’ supply. Pricing actually accelerated to a 7% year-over-year gain, which is another indicator of the potential gains for housing.

Another positive indicator comes from the Mortgage Bankers Association mortgage data, which finds that mortgage applications for home purchases have increased for five straight weeks and are down only 1% compared to a year ago. Given this demand environment, thus far, relatively few builders are cutting prices to generate sales. In the April HMI, only 22% of builders reported using price incentives, and among those, the typical price cut was only 5%. In contrast, 40% of builders reduced prices at the end of 2018, during the housing soft patch of 2018-2019.

Despite these relatively encouraging housing data points, macro data continue to show historic challenges. Another 2.4 million jobless claims were filed this week, bringing the two-month total to almost 39 million total job losses. The data implies an unemployment rate of more than 17%, with our forecast suggesting a rate closer to 20% for the second quarter. Such job losses will have ripple effects on purchase data for consumers, although it is worth noting that prior economic research finds that duration matters for job losses.

When unemployment is held to periods of less than six months, consumers are able to adapt without major changes in decisions regarding large purchase plans. The April job report found that 18 million individuals believed it was possible for them to regain their prior employment, which is an encouraging sign for a rebound.

The U.S. Occupational Safety and Health Administration this week announced a significant reversal of previous policy on an employer’s obligation to record work-related cases of COVID-19 on OSHA injury and illness logs. The new requirements go into effect Tuesday, May 26.

As with the previous guidance, OSHA acknowledged that it will be difficult to establish that a particular COVID-19 case is “work-related.” But the new guidance does place additional obligations on most employers to conduct an investigation and to make a reasonable determination as to whether the illness was transmitted on the job.

It should be noted that the new guidance applies only to employers currently subject to OSHA’s recordkeeping requirements. Due to employee size limitations, many home builders are exempt from most of the new requirements.

Employers who are subject to OSHA’s recordkeeping requirements must record a case of COVID-19 as job-related if:

1. It is a confirmed case of the virus (a positive test),
2. It is “work-related” in that an event or exposure in the work environment either contributed to or caused an employee to contract the virus, and
3. It results in death, days away from work, restricted work or transfer, or medical treatment beyond first aid.

Employers who have no recordkeeping obligations need only report work-related COVID-19 illnesses resulting in an employee’s death or in-patient hospitalization, amputation, or loss of an eye. But those employers must still investigate positive tests to determine if the case is work-related.

OSHA will consider the “reasonableness” of an employer’s investigation when determining compliance. The new guidance concedes that employers are not expected to undertake extensive medical inquiries, given privacy concerns and most employers’ lack of medical expertise. However, in most circumstances, employers should complete the following steps when they learn of a COVID-19 case:

• Ask the employee how they believe they contracted the illness.
• Discuss with the employee, while respecting privacy concerns, the activities both inside and outside of work that may have led to the illness.
• Review the employee’s work environment for potential COVID-19 exposure.

OSHA recognizes that determining the work-relatedness of a COVID-19 diagnosis is difficult for most employers, and noted that it would consider certain types of evidence that weigh in favor or against work-relatedness. For example, it is likely the virus was contracted at work if several cases develop among workers who work closely together and there is no alternative explanation. Conversely, if only one worker at a site tests positive, it is likely not work-related.

NAHB recognizes that members will have many questions about the new guidance. Staff is carefully reviewing the new guidance and intends to work with OSHA on implementation.

Any questions may be directed to Rob Matuga or Felicia Watson.

Home builders associations are teaming with members and their local school systems to keep construction career exploration available to students during the COVID-19 pandemic. The Home Builders Association of Greater Des Moines  and the Fredericksburg Area Builders Association (FABA) shared how they continue to adapt in order to reach the industry’s next generation of workers.

Prior to the pandemic, more than 3,000 students were expected to attend a Build My Future event April 15 in Des Moines. The popular annual event provides students hands-on learning opportunities to explore careers in the construction and design industry. The HBA of Greater Des Moines and participating partners quickly shifted the in-person event to an online format. A short video directed students to follow Iowa Skilled Trades on social media, where videos highlighting the construction industry were posted hourly.

The videos can be viewed on the Iowa Skilled Trades Facebook page.

The HBA of Greater Des Moines is exploring other ways to make career exploration accessible to students, including virtual industry professional roundtables with Q&A opportunities for students.

Brandon Patterson, who leads workforce development efforts at the HBA, advises other associations that are looking to launch virtual events to start with a Facebook Live event or Zoom meeting. “The summer will be here before we know it and we don’t want to lose those kids,” said Patterson.

FABA Executive Officer Maria Moore encouraged her members to submit videos to the Spotsylvania Career and Tech Center Virtual Career Days to show students opportunities in the construction industry. The center requested short videos of professionals sharing their career stories and what a normal day on the job looks like.

“We all have members we can ask to share their career story,” said Moore. “It’s easy to make a 3-minute video, especially now since we’re all accustomed to video calls, but it does take a personal call (for the request).”

Republic Home Builders, Halsey Homes, Universal Title Fredericksburg, and Home Builders Association of Virginia Chief Executive Officer Craig Toalson submitted videos for the Architecture and Construction Virtual Career Fair Days.

You can view their videos and others on the center’s Career Development Facebook page.

Learn more about NAHB’s workforce development resources on nahb.org.

The Federal Housing Finance Agency (FHFA) today re-proposed a 2018 plan to establish a new regulatory capital framework for Fannie Mae and Freddie Mac. The proposed rule is a critical step toward FHFA’s goal to release the two government-sponsored enterprises from conservatorship.

If the new proposal had been in effect in 2019, Fannie Mae and Freddie Mac would have held a combined $243 billion in capital, the FHFA said.

Fannie Mae and Freddie Mac were placed into conservatorship by the U.S. Treasury in September 2008.

Comments will be due 60 days after the notice is published in the Federal Register.

View the FHFA press release.