NEW YORK–Demand for new homes is rebounding not in spite of the coronavirus pandemic, but because of it, with some analysts saying renters locked down in small spaces are looking for more room should another stay-at-home order ever be issued.
As CUToday.info has reported new home sales had nearly ground to a halt, but demand for new homes, especially newly built homes, is rebounding, according to an analysis by John Burns Real Estate Consulting and first reported by CNBC.
According to the John Burns’ data, in the initial four weeks of the national shutdown, sales of newly built homes began falling precipitously, down 85% from normal spring activity by the fourth week. In the past two weeks, however, the numbers have started to climb.
“We’re still down roughly 65%, but more positive news is coming out of the new home market, particularly for builders who are targeting the first time and entry level buyers,” Devyn Bachman, manager of research at JBRC, told CNBC, adding that a wave of renters is leaving their apartments and eyeing new homes.
Skewed Toward Renters
In her research, Bachman told CNBC she found demand for new construction heavily skewed toward renters, especially young couples with two incomes who feel secure in their employment.
CNBC further reported Zillow, the nation’s largest real estate listing site, reported last week a slight increase in overall search traffic after volume had dropped dramatically. Redfin, a real estate brokerage, also reported an increase potential buyer inquiries to agents.
The report noted there is also far more supply of newly built homes for sale, twice the supply of existing homes at this point, and builders have been adding more incentives and offering their own in-house mortgage services, “making the process much easier for buyers already dealing with the difficulties of social distancing.”
Need More Room
Another driver of sales: Some analysts have suggested government lockdowns may have long-lasting impacts on not just how but where Americans choose to live. The drive to dense, urban areas by the Millennial generation may reverse course, especially as some worry about second shelter-in-place orders after the economy reopens, CNBC said, noting staying at home is hard enough, but the smaller the home, the harder that is.
“Urban apartment dwellers often don’t have the luxuries of separate home offices, basements for exercise equipment, or back yards for private outdoor time,” the report observed.