Oh, there’s no place like home for the holidays.
So begins the holiday standard made famous by Perry Como. Composed in the 1950s by Robert Allen with lyrics by Al Stillman, the song seems fitting these days as Americans are lured to the suburbs, just as they were when Mr. C. was in his prime. Only this time around, instead of being fueled by postwar affluence and growing baby boom families, the move is being driven by a pandemic and the need for more space for people to work at home, educate their children and avoid crowds.
Nine months into the pandemic, demand for single-family homes, buoyed by historically low interest rates, continues to soar. Confidence among builders remains high, with the National Association of Home Builders index coming in at 86 for December, which was a slight decline from the record of 90 set in November, according to data released Thursday by the association. A reading above 50 is considered a sign of improving confidence. Last December, before the pandemic, it was 76.
This confidence, in turn, continues to drive building permits, which were up 6.2% month over month to 1.639 million in November, and housing starts, which were up 1.2% month over month to 1.547 million, according to Commerce Department data released Thursday. This pace continues to exceed the long-term equilibrium rate between supply and demand of 1.5 million. If the housing market continues at its current pace, this equilibrium figure may need to be revised upward.
Housing will close out the year as one of the lone bright spots in the real economy. Fueled by low interest rates and soaring demand, the pipeline of homes to the market should continue to accelerate. After all, as Como crooned: You can’t beat home, sweet home.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.