As the unemployment rate is increasing and forbearance measures are coming to an end, economist Mark Zandi claims that the housing market should grow weaker as there should be more foreclosures and foreclosure sales as a result. In the meantime, millions of homeowners in the US have turned to forbearance to postpone their mortgage payments. Zandi further adds that the housing market has shown resilience during the crisis even though it may take by the end of the year to stabilize and cool off.
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Increasing Sales in the Housing Market
The housing market has been one of the strongest and most resilient sectors during the first wave of COVID-19 pandemics, Zandi, the chief economist at Moody Analytics, claims that sales of new homes are on the rise. During May, home sales rose by 13% on a year-to-year level. Furthermore, according to the real estate agencies, homebuyers are shifting to more rural areas driven by the COVID-19 pandemics. That is how, while demand is growing, the supply of new homes is sent to a decline.
More Construction Projects Needed to Increase the Housing Supply
The general lack of supplies in the housing market, new and existing supplies is one of the primary reasons why sales in the market are sent on a decline. Even though the current home sales are increasing, sales in 2019 during June were significantly higher as Zandi suggests. In the meantime, Zandi emphasizes that the housing market has done more than well during the first wave of pandemics.
Housing Market Should Stabilize by 2021
As far as builders’ stocks concerned, the demand has increased since the last week of March. The increase went over 80% in three months for US Home Construction ETF. Moreover, economists such as Zandi suggest strong chances for the housing market to recover and bounce back by the end of 2020 and the beginning of 2021.
