New and existing housing activity declined across the board in May. However, a trend is beginning to appear within the housing market, where other housing indicators—existing home sales, construction jobs, mortgage locks, homebuilder sentiment, and more—started seeing improvement this month.
Maintenance and remodeling—a subset of maintenance that includes renovations, additions, and alterations—declined year over year again in May, but not to the extent that it did in April. Single-family housing authorizations declined substantially, however, this was conceivably a reaction to steep declines in existing home sales last month.
The biggest unknown right now is whether April was indeed the trough or if deeper drops are imminent. However, as the economy opens slowly and COVID-19 testing begins to ramp up, all signs suggest a rebound may be on the horizon.
New and Existing Housing Supply Activity, May 2020
- Single-family housing authorizations decreased 6.89% year over year.
- Existing housing maintenance volume decreased 13.33% year over year.
- Existing housing remodel volume increased 16.66% year over year.
“Housing data can be a leading indicator of economic activity,” said Jonathan Kanarek, managing director of BuildFax, a Verisk business. “While the housing outlook for May seems grim, we do not expect declines to persist. The promising bounce back of construction jobs, combined with improving home builder sentiment, suggests the recent slump in housing activity may be short-lived. Looking ahead, it will be particularly important to monitor the rebound in regional housing activity not only for investors and traders, but for industries like insurance, looking to capitalize on new business opportunities. While it may take longer for the Northeast to kickstart new construction activity, the Midwest and South are likely to see a faster rebound, generating more opportunities for growth.”
Download the full report for a deep dive into how housing activity has reacted to progression of the COVID-19 outbreak.