The National Association of Home Builders (NAHB) has released new data outlining the effect COVID-19 has had on U.S. construction crews.
The latest NAHB/Wells Fargo Housing Market Index (HMI) shows builder confidence fell 42 points in April to 30. Any reading below 50 is considered a signal of poor builder confidence.
April’s decline is the largest single monthly change in the history of the index, according to the NAHB. It also represents the first time builder confidence has been below 50 since June 2014.
“This unprecedented drop in builder confidence is due exclusively to the coronavirus outbreak across the nation, as unemployment has skyrocketed and gaps in the supply chain have hampered construction activities,” says NAHB Chairman Dean Mon.
Mon also said one factor impacting builder confidence was the lack of clarity regarding Paycheck Protection Program (PPP) loans.
“Meanwhile, there continues to be some confusion over builder eligibility for the Paycheck Protection Program, as some builders have successfully submitted loan applications while others have not been able to. NAHB is working with the White House, Treasury and Congress to get the broadest builder participation possible. Home building remains an essential business throughout most of the nation, and as the pandemic shows signs of easing in the weeks ahead, buyers should return to the marketplace.”
Robert Dietz, NAHB chief economist, says COVID-19 has had an unprecedented impact on the housing industry.
“Before the pandemic hit, the housing market was showing signs of strength with January and February new home sales at their highest pace since the Great Recession,” Dietz says. “To show how hard and fast this outbreak has hit the housing sector, a recent poll of our members reveals that 96% reported that virus mitigation efforts were hurting buyer traffic.”
Dietz says a healthy housing market is critical to greater economic success.
“While the virus is severely disrupting residential construction and the overall economy, the need and demand for housing remains acute. As social distancing and other mitigation efforts show signs of easing this health crisis, we expect that housing will play its traditional role of helping to lead the economy out of a recession later in 2020.”