To find a V-shaped recovery from the economic wreckage of the coronavirus pandemic, look to the nation's single-family homebuilders.
Homebuilder sentiment jumped 14 points to 72 in July, according to the National Association of Home Builders/Wells Fargo Housing Market Index . That is exactly where it was in March, before the pandemic hit the U.S. economy. Anything above 50 is considered positive sentiment. The index plummeted to 30 in April.
Mortgage rates have been setting new record lows almost weekly, and it is unlikely they will turn higher any time soon. That has given buyers more purchasing power, especially for newly built homes, which come at a price premium. Mortgage applications to purchase a newly built home were up over 50% in June annually.
Builders are clearly thrilled that demand is surging back, but they are also surprised and largely unprepared. Most builders either shut down or severely curtailed operations in March and April and are now struggling to get back up to speed. They had stopped buying land and had laid off much of their labor force. Material makers did the same, which is why builders are now facing soaring prices for lumber.
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