- Prior to COVID-19, the US housing market was starting to take off; in February, monthly Single-Unit Housing Starts and Multi-Unit Housing Starts were respectively up 33.2% and 53.2% from February 2019 levels
- Growth in overall US Housing Unit Building Permits accelerated through March, with the highest annual growth rates in New Jersey (36.0%), Connecticut (34.7%), and Arkansas (32.0%)
- The impact of COVID-19 can be seen in the drop-off in monthly Single- and Multi-Unit Housing Starts, which in April were respectively down 26.0% and 40.9% from April 2019 levels
- We expect that COVID-19 will interrupt growth in the residential housing market, but thereafter the industry will be a relative winner due to very low mortgage rates and the tight supply of existing homes
Why does ITR think it will take until early 2021 for the economy to pick up? Shouldn’t we see things go back to normal as restrictions are lifted?
Lauren Stockli, Economist at ITR Economics™, answers:
Great question. We frequently ask ourselves similar questions in order to ensure our outlook truly reflects the most probable course of events. Our expectations assume that different aspects of the economy will recover at different times during the second half of this year and into early 2021. To use an analogy, we don’t expect all the lights in the house to turn on at once, but rather one room at a time. Some states will get back to business faster than others. Some businesses will be able to rebound faster than others. If some people remain hesitant (and there are a lot of them), then restaurants, bars, travel, sporting events, venues, etc. will be particularly slow to come back to full capacity. Accordingly, people employed in those sectors may not be able to return to their pre-COVID-19 buying behavior for at least some time. We are also concerned about another potential complication: a second wave of layoffs, beginning Aug. 1, by businesses that have used up their PPP loans. I hope that answered your question.
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