Coronavirus Slams Homebuilding Industry

Posted on: 04-21-2020
Coronavirus and the home building industry

Coronavirus Slams Homebuilding Industry

The National Association of Home Builders reports that due to the coronavirus, homebuilder confidence suffered its largest ever one month decline in April.  Homebuilder confidence, as measured by the NAHB/Wells Fargo Housing Market Index, fell to a level not seen since 2012.  The NAHB explains the drop as the result of unemployment, supply chain disruption, and reduced buyer traffic, all caused by the coronavirus.  The downturn follows recent strong signs for homebuilders with increasing buyer interest combined with low mortgage interest rates.

Wall Street seems to agree that homebuilders should be less confident given the coronavirus.  For example:

  • Lennar’s stock price dropped 39% from its February 11 price;
  • D.R. Horton’s stock price dropped 35% from its February 21 price;
  • Pulte’s stock dropped 45% from its February 11 price;
  • NVR’s stock dropped 27% from its February 21 price;
  • Beazer Home’s stock dropped 68% from its January 30 price; and
  • K. Hovnanian’s stock dropped 69% from its February 19 price.

However, Wall Street seems to believe the homebuilding industry will recover after the coronavirus situation ends.  From a March 23 low to April 9, the U.S. Home Construction ETF gained 38%.  Market analysts are also reporting that homebuilding is “on solid footing.” Unfortunately, the uncertainty may cause some homebuilders to cut costs through reducing quality control and squeezing their subcontractors.  The inevitable result of such cost cutting will be improper construction and construction defects.  While local building officials are already overworked, understaffed, and unable to ensure quality construction, the construction lawyers at The Steinberg Law Firm hold homebuilders accountable when they sell improperly constructed homes needing repairs.  If you purchased a home built in the last ten years and are experiencing problems from bad construction, give the construction lawyers at The Steinberg Law Firm a call at 843-720-2800.  We provide a free consultation to discuss the problems you are experiencing and options to address them.

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