As lockdown orders began to ease in May and June 2020, housing data rebounded quickly, providing evidence that this industry is positioned to lead the economy forward. Single-family permits rose almost 12% in May, mortgage applications are at their highest level since January 2020, and builder sentiment, measured by the NAHB/Wells Fargo Housing Market Index (HMI), jumped 21 points in June – the highest one-month increase in the series history.

At the onset of the COVID-19 pandemic, there were rumors about builders lowering home prices as a result of the crisis. Last month’s HMI survey revealed that in fact only 22% of builders nationwide cut prices in April 2020. This month’s survey reveals that the share of builders reducing prices to bolster sales dropped even lower in May 2020, down to 15%. For historical context, 49% of builders cut prices in March 2008, in the midst of the last housing recession (Figure 1).

Builders who did reduce home prices in May 2020 cut them by an average of 5%, the same discount reported a month earlier. In contrast, builders were reducing home prices more aggressively in May 2007 (7%) and March 2008 (8%) (Figure 2).