Housing starts plummeted 30.5% to an annualized rate of 891,000 in April as the full weight of the coronavirus lockdowns hit the sector, the Commerce Department reported on Tuesday. The plunge extended to permits to build, which dropped to an annualized rate of 1,074,000, representing a 20.8% decline.
Many hoped that the designation of residential construction to be an essential business in most states would lessen the impact of mandatory lockdowns.
Politicians recognized that slowing the supply of housing just as it was rising above the projected 1.5 million rate needed to ease the housing shortage would only exacerbate the affordable housing crisis. It was believed that contractors could wear masks and practice social distancing on the job site, mitigating risks of coronavirus spread.
But workers did not feel safe and would not report to the jobs. The National Association of Home Builders (NAHB) reported that 87% of builders were reporting issues with workers and subcontractors being willing to report to the job site. Supply chain disruptions also affected the job sites as 81% of builders reported that COVID-19 restrictions were affecting the supply of building materials.
While the April figures are grim, there was a glimmer of hope that a bottom had been reached and the industry will begin to rebound. The NAHB Housing Market Index bounced back to 37 in April, after nosediving by 42 points to 30 in March. While buyer traffic still remains low, home builders are hopeful that the lifting of state restrictions and still record-low mortgage rates will buoy home sales this summer.
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