May housing activity declined year over year “across the board” according to a report by Buildfax, a property condition data service provider. However, the report shows positive homebuilder sentiment and an increase in construction hiring, suggesting these slowdowns will eventually burn out.
Single-family housing authorizations decreased by 8.87% year over year in May, the first year-over-year decrease since the emergence of COVID-19. Though April data showed a promising year-over-year increase of 1.2% in single-family authorizations, those numbers slipped back down in May.
Decreases in single-family housing authorizations may be a reaction to the steep declines in existing home sales in April, said the report. Though authorizations may be falling in the wake of the COVID-19, demand is 25% above pre-pandemic levels.
Existing housing activity also took another major hit last month as maintenance and spend fell 13.33% and 19.24% year over year, respectively. However, May’s decline is not as steep as April’s when maintenance volume and spend plummeted 29.09% and 29.71% year over year, respectively.
The remodel volume – a subset of maintenance that includes renovations, additions and alterations – also decreased 16.66%.
As the economy opens back up, Buildfax predicts a strong revival. This sentiment is supported by recent data from NAHB that residential construction was among the top sectors to see job gains in May – with over 226,000 home builders and remodeling jobs added to support increased housing demands.
From a more regional and localized lens, the report estimates the Northeast will take longer to kickstart new construction activity while the Midwest and South are likely to see a faster rebound.
“Looking ahead, it will be particularly important to monitor the rebound in regional housing activity, not only for investors and traders, but for industries like insurance, looking to capitalize on new business opportunities,” Jonathan Kanarek, managing director of BuildFax, said.