As economists everywhere are searching tirelessly for the ever-elusive “V-shaped” economic recovery amidst the COVID-19 crisis, many seem to have passed on US homebuilders, as the industry continues be a major bright spot amidst a challenging environment.
US homebuilders continue to “build their homes on solid ground”, as the industry continues to be supported by strong cyclical and structural trends, despite the ongoing health crisis. Increased consumer demand for new, high-tech homes with amenities for both school and work, a sharp contraction in the supply of existing homes available for sale, and flight to the suburbs amongst city dwellers, led to a surge in housing demand in June. It is also the highest pace of sales growth for the industry since the height of the unprecedented housing boom back in 2005.
Despite the ongoing COVID-19 pandemic, US homebuilders are seeing strong demand and lots of interest for new construction homes, as existing-home inventory continues to remain steady. On a regional basis, homebuilders in the West, Northeast, and Midwest are benefiting from renewed demand that was kept back due to the lockdowns in the early spring. Furthermore, record-low interest rates have also been fueling industry demand, as the Federal Reserve (“Fed”) cut rates to near zero, in an effort to contain the economic damage from the COVID-19 pandemic.
This has come together to create a perfect storm for the US homebuilders, as consumer demand is at a level not seen since the mid-2000s.
