Apr 23 2020
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Coronavirus Causing Home Owners to Pull Back on Remodeling

By Industry News

A recent NAHB survey of professional remodelers shows the negative effect the coronavirus pandemic is having on the decision to remodel. More than 90% of remodelers in the survey reported a slowdown in both the rate at which inquiries are coming in, and in the general willingness of home owners to remodel at this time.

While 96% of remodelers said the virus was hurting the rate at which inquiries are coming in, a full 70% characterized the negative impact on inquiries as major rather than minor.

The survey listed eight possible impacts of the coronavirus on the remodeling market. More than 80% of respondents said the virus was having a noticeable effect on:

  • Home owners’ concerns about interacting with remodeling crews (86%)
  • Supply of N95 respirator face masks (84%)
  • Cancellations or delays of existing projects (84%)

In some respects, the impact of the coronavirus on the remodeling market mirrors what we’re seeing in the market for new homes. In both cases, the pandemic is having a number of significant adverse effects, but the strongest ones are the negative impacts on the behavior of potential customers.

NAHB Senior Economist Paul Emrath provides more details in this Eye on Housing blog post.

Apr 23 2020
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U.S. Weekly Jobless Claims Hit 4.4 Million

By Housing

The U.S. Department of Labor released the Unemployment Insurance Weekly Claims Report for the week ending April 18th. With the impact of the COVID-19 pandemic, the number of initial claims for unemployment insurance continued to rise, bringing the total jobless claims to more than 26 million over the past five weeks.

In the week ending April 18th, the number of people who applied for unemployment benefits, known as jobless claims, was at a seasonally adjusted level of 4,427,000, following a downward revised 5,237,000 claims in the previous week. The four-week moving average increased to 5,786,500, from a revised average of 5,506,500 in the previous week. After reaching a peak of 6.9 million in the week ending March 28th, the number of the weekly jobless claims is slowly declining, but still counted in the magnitude of millions. The five-week Jobless claims totaled over 26 million to an unprecedented level.

The seasonally adjusted insured unemployment rate jumped by 2.8 percentage points to 11.0% for the week ending April 11st. The number for seasonally adjusted insured unemployment increased to 15,976,000 during the week ending April 11st, from a revised level of 11,912,000 in the previous week. It marks so far the highest level of seasonally adjusted insured unemployment in the history of the seasonally adjusted series.

The advance unadjusted number of actual initial claims under state programs, released by the U.S. Department of Labor, totaled 4,267,395 in the week ending April 18th, decreasing 14% from the precious week. The chart below presents the top 10 states ranked by the total number of actual initial claims over the past five weeks (from the week ending March 21st to the week ending April 18th). Similar to the previous week, California led the way with over 3.3 million job claims, followed by Pennsylvania (1.5 million) and New York (1.4 million). Also, the total jobless claims in Texas, Michigan, Florida and Georgia exceeded 1 million in the past five weeks. The number of jobless claims in these 10 states accounted for about 55% of the total number of jobless claims over the past four weeks, and also note that nine of these 10 states are ranked as the top ten most populated states in the country.

Apr 23 2020
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New Home Sales Fall 15.4% in March on Virus Concerns

By Industry News

Sales of newly built, single-family homes fell 15.4% to a seasonally adjusted annual rate of 627,000 units in March, coming off a downward revision in February, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The March rate is 9.5% lower than the March 2019 pace.

“Despite the sharp decline in new home sales this month, the first quarter of 2020 was actually 6.7% higher than the same period last year, reflecting a strong pace prior to the virus outbreak,” said NAHB Chairman Dean Mon. “While we expect to see some further impacts to the industry, we remain confident that housing will be a sector that will help lead the economic recovery.”

“The drop in March sales reflects buyer concerns over the virus, and was primarily concentrated in the hardest hit regions of the Northeast and West,” said NAHB Chief Economist Robert Dietz. “The weakening in sales is in line with our builder surveys that showed dramatic declines in buyer traffic and builder confidence in April. We expect further slowing of the pace of new home sales in April, as jobless claims continue to rise, before stabilizing later this year.”

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the March reading of 627,000 units is the number of homes that would sell if this pace continued for the next 12 months.

Inventory rose to a 6.4-month supply, with 333,000 new single-family homes for sale, 1.2% lower than March 2019. Of that total, just 76,000 are completed, ready to occupy. The median sales price was $321,400, compared to $310,600 one year ago.

Regionally, new home sales were down across all four regions: 41.5% lower in the Northeast, 8.1% down in the Midwest, 0.8% down in the South and 38.5% lower in the West

Apr 22 2020
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Some Cities Keep Construction Going Via Virtual Inspections

By Industry News

Although many cities have classified residential construction as an essential business, a designation that allows home building to continue during the coronavirus-induced shutdown, this designation may not be sufficient to keep construction going. To help remedy this situation, some jurisdictions have started to allow virtual inspections.

Thanks to efforts spearheaded by NAHB, the Department of Homeland Security classified residential construction as an “Essential Infrastructure Business” in its March 28 guidance.

Individual state and local governments are not required to follow the guidance; but a recent survey by NAHB shows 78% of builders report that residential construction has been classified as essential in the areas where they build.

Though construction activity is still permissible throughout much of the nation, the pandemic has slowed home building in a number of ways. It is therefore not surprising that, as shown in this recent NAHBNow post, the virus has caused nearly half of home builders to put projects on hold.

One possible bottleneck is availability and willingness of workers at the local building department to perform construction inspections. According to 2013 NAHB research, the median single-family home requires eight different inspections while it is being built, and some require 15 or more. So availability of inspectors can have a significant impact, and 82% of builders recently reported that the virus pandemic has had a noticeable, adverse effect on how long it takes the local building department to respond to a request for an inspection.

Some local building departments are attempting to alleviate this problem by allowing third-party and virtual inspections. However, the NAHB survey shows that just 4% of builders say this has started happening recently in response to the pandemic (compared to 23% who say third-party inspections were already standard operating procedure pre-virus). On the other hand, 20% of builders say their local building departments have started to allow virtual inspections recently, specifically in response to the current emergency.

NAHB Senior Economist Paul Emrath provides more analysis in this Eye on Housing blog post.

Apr 22 2020
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Expand Your Knowledge with the Best of IBS 2020 Webinar Series

By Industry News

Webinar Series on April 29, which will expand your business management knowledge over the next six months. These dynamic webinars represent a range of topics, from leadership to home buyer preferences. Each one-hour webinar is held on a Wednesday, 2-3 p.m. ET:

Save more than 50% when you purchase the webinar package. It’s like getting four webinars for free! You can also purchase each webinar individually.

NAHB Continuing Education: Each of the webinars in the series earns one hour of continuing education credits for the following 12 designations: CAPS, CGA, CGB, CGP, CGR, CMP, CSP, GMB, GMR, Master CGP, Master CSP, MIRM

Register Today! For questions about registration, please contact Deborah Krat at EdWebinars@nahb.org or 800-368-5242 x8155.

Apr 22 2020
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Refinancing Shows Strong Year-over-Year Gains While Purchases Slide

By Housing

The Mortgage Bankers Association’s latest Weekly Application Survey shows a 0.3% seasonally adjusted decline in loan application volume from the previous week. The Refinance index decreased by 1% from the previous week and was 225% higher than it was the same week one year ago. The Purchase Index increased 2% from one week earlier but was 31% lower than it was the same time a year ago. The MBA notes that the pandemic-related economic stoppage has caused some buyers and sellers to delay their decisions until there are signs of a turnaround. This has resulted in reduced buyer traffic, less inventory, and March existing-homes sales falling to their slowest annual pace in nearly a year. Most importantly, the economic stoppage has halted the momentum in the housing market generated by young, would-be homebuyers, mostly from the millennial generation, preventing them from entering the market.

With the federal government’s recent passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act, not only did qualifying individuals receive economic impact payments, i.e., stimulus checks, but small businesses were also extended emergency advances of up to $10,000 as part of the Small Business Administration’s economic injury grant. With these measures in place, expanding businesses and families’ balance sheets to accommodate for more real estate is less of a priority than keeping their existing assets afloat. The CARES act also provides options for mortgage forbearance.

As can be seen from the above figure, year-over-year gains in refinancing skyrocketed in the middle of March and continued their upward trajectory towards the end of the second week of April. Year-over-year purchasing changes, however, slipped into negative territory for that period, posting a year-over-year decline of 31% in the latest week. The National Association of Realtors cites that lender credit standards such as higher down payments and credit scores would likely deter home sales’ bounce when the pandemic is over. Before the outbreak, foreclosure rates were at historic lows.