While the US economy continues to struggle to recover from the effects of the COVID-19 pandemic, there are a few bright spots. One of these is the new housing market. Many people across the US – which is already facing a shortage of homes for potential buyers – seek to escape urban centers that were among the areas most affected by the coronavirus in the early stages of the pandemic. Others – perhaps tired of apartment life or realizing that they can work remotely – would simply prefer a residence of their own.
Due to this high interest in homeownership, homebuilder confidence reached a record high in August at levels not seen in over three decades. In addition to strong demand, low interest rates have made mortgages highly affordable for many consumers, who can obtain the financing they need once they find a home to purchase. Because of these factors, the nation’s homebuilders have worked – despite a shortage of lumber – to quickly erect new homes.
Indeed, this heightened interest in home buying has caused an unexpected difficulty for the nation’s homeowners. Many owners – looking to refinance their existing mortgages – have been unable to so as lenders have worked to service new homes loans that offer the possibilities of more profit. This may affect the construction market, as many homeowners take out funds while refinancing to engage in home improvement projects, reinvesting some of their savings on the mortgage into their residences. An inability to refinance will reduce the amount of money available for home improvements, though homeowners will be likely to invest in their homes when able.
For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products. Freedonia also offers an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.