Will housing market head downhill for remainder of 2020?
Experts say sector has yet to show true pandemic-related 'economic scarring'
While the housing market was one of the sectors that appeared poised to lead the U.S. economic recovery following the domestic coronavirus outbreak, experts predict another dip may be on the horizon.
As the number of confirmed cases continues to surge in a handful of states, housing market experts believe the sector’s recovery will take a “Flying W” shape – as opposed to a “U” or a “V,” according to a report by real estate firm Haus. June will be a bottom for single-family home sales and purchase mortgages, representing the first leg of the “W” shape, experts say.
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And a second dip isn’t necessarily conditional upon a second wave of coronavirus cases.
“It’s important to emphasize here that while we expect a rebound in housing market indicators over the coming months, the threat of another dip remains real in the late fall and early winter, even if the virus DOESN’T make a significant resurgence,” researchers wrote. “This is because the upswing that we’ll see this summer is a result of pent-up demand from homebuyers and supply-in-progress from homebuilders that has simply been pushed off a few months.”
After backlogged demand is flushed out, however, Haus experts say the true “economic scarring” resulting from the pandemic will be evident.
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A second decline, which is not dependent upon a second significant outbreak of the virus, could be worsened by it, experts said.
When it comes to overall prices and sales, researches don’t expect a full-on recovery to begin until June 2021 for most housing markets.
Haus’ forecasts come as the market continues to show signs of resiliency. Existing home sales rose more than 20 percent in June, according to the National Association of Realtors, with growth throughout major regions of the U.S.
Unlike Haus, experts at the National Association of Realtors view the revitalization as “sustainable for many months ahead.”