Global Economics

The State of the U.S. Housing Market

COVID-19 has been making global economic waves since February of this year. Airlines, retail, manufacturing, and more have suffered losses as a result of the virus’s impact on the economy. The housing market itself has seen a drop in existing home sales of 9.7 percent reported in May, which is why investors are anxiously awaiting the new home sales report that will be released Tuesday morning.

Looking at the sales of existing homes is crucial because they account for 90 percent of home sales in the U.S. The ever-fickle housing market was doing reasonably well prior to the virus impacting sales. Permits being taken out for the building of new single-family homes, for instance, rose by 1.7 percent in February before the market dip.

Investors began predicting the effects COVID-19 would have on the housing market back in March. Senior economist Ryan Sweet told Reuters in a March interview, “Though mortgage rates will remain supportive to housing, COVID-19 will likely take a heavy toll. COVID-19 will likely hit the housing market in March and April.”

When the report releases on Tuesday, economists and investors will be looking for hopeful signs of market improvement since the dramatic downturn several months ago. There are some reported expectations of a 1.9 percent increase in new home sales for May; April previously held only a 0.6 percent increase.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Trader Buzz). I have no business relationship with any company whose stock is mentioned in this article.


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