20 Jul High hopes for the remainder of 2020
In times of crisis, we usually revert back to what we know and understand. The housing industry is no different. 2020 has proven to be a very tough year for a lot of us. There has been plenty of uncertainty and unknown variables that have come with this virus. But one thing that has proven to persist through it all is the homebuilding industry.
Housing is vitally important to local, state and national economies. A large percentage of the U.S. economy relies on housing and nothing gets the local economy moving again like home building.
Building 1,000 average single-family homes creates 2,900 full-time jobs and generates $110 million in taxes and fees for all levels of government to support police, firefighters and schools, according to NAHB’s National Impact of Home Building and Remodeling report.
We are all in this together. I won’t lie to you, it has been tough. I know personally that northern Indiana was impacted by the downturn in March, April and May. However, there may be some blue skies on the horizon. We are seeing many positive economic indicators that point to a recovery, including low interest rates, rising demand and an increase in mortgage applications throughout the country. Single-family and multifamily housing production is on an upward path. Indiana’s permit numbers have consistently held steady through the COVID-19 crisis, and are actually up 1% year over year for the first five months.
NAHB Chief Economist Robert Dietz recently published a few key points that are promising signs of a strengthened housing market:
- Proving wrong predictions of substantial home price declines, Case-Shiller data indicate a 4.7% year-over-year price gain in April;
- According to Freddie Mac, the average 30-year mortgage interest rate was just below 3.1% at the start of July;
- In May, construction hiring surged and job openings increased to 365,000, down only slightly from the 373,000 tally measured a year earlier; and
- The economy saw an employment gain of 4.8 million and a decline for the unemployment rate to 11.1%.
Housing has the potential to have a major impact on the recovery of the U.S. economy. If we are able to continue to safely operate during the COVID-19 crisis the home building sector will create more jobs and drive the economy in a major way. Better days may be close. We just have to keep persisting. Something I know many of you are well seasoned in. IBA staff and your senior officers are here for you to reach out to with any questions or resources available to help you through the summer. We are all in this together, and we will come out on the other side together as well.