US home building collapses 30% in April amid pandemicWednesday, May 20, 2020
WASHINGTON, United States (AFP) — Construction of new homes plunged just over 30 per cent in April from the previous month, amid the widespread US lockdowns to prevent the spread of COVID-19, according to government data released yesterday.
The collapse to just 897,000 units put the annual rate of housing starts 29.7 per cent below the same month of 2019, the Commerce Department reported.
The declines were widespread across the country, with the north-east taking the worst hit — a 44 per cent drop in construction starts — while the Midwest saw a relatively small 15 per cent decline.
Building of multi-family housing saw the most severe impact in most regions.
Meanwhile, permits for new construction, which in normal times is a sign of demand in the pipeline, fell 20.8 per cent compared to March. But with the ongoing coronavirus pandemic, these are hardly normal times.
“Due to recent events surrounding COVID-19, many governments and businesses are operating on a limited capacity or have ceased operations completely,” the Commerce Department said, adding that the data quality still meet publication standards.
Housing is a critical sector of the US economy and demand was high before the crisis, given low mortgage lending rates, and builders were struggling to keep up with demand while prices were moving higher.
Since the pandemic hit, the Federal Reserve has slashed the benchmark interest rate to zero, which could be expected to help support home buying. But with 30 million jobs lost to the pandemic — at least temporarily— the outlook remains uncertain.
Still, Ian Shepherdson of Pantheon Macroeconomics said, “Housing construction likely has hit bottom.”
“A steep drop in activity was inevitable given the lockdowns, but we think these numbers will mark the floor; May will be better, and June better still,” he said in an analysis, noting that mortgage applications had picked up, recovering more than half the pandemic-related declines.
Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at https://bit.ly/epaper-login