The housing market’s rebound from COVID-19 is stronger than predicted, with each month seeing large jumps in mortgage applications, permits, and builder sentiment. According to NAHB, the number of builders cutting home prices as a result of the pandemic are dropping. In May, 22% of builders surveyed said they reduced home prices to bolster sales and limit cancellations. Now that housing demand is growing, only 15% of home builders made the choice to drop prices by 5% in June. These changes continue to show builders that the housing industry is more solid than it was in 2007 and 2008, when double the amount of builders cut prices for nearly a year straight.
In a further sign that the housing rebound is gaining momentum, fewer builders are lowering home prices as a result of the COVID-19 pandemic.
Last month’s HMI survey revealed that just 22% of builders nationwide cut prices in April 2020. This month’s survey reveals that the share of builders reducing prices to bolster sales dropped even lower in May, down to 15%. For historical context, 49% of builders cut prices in March 2008, in the midst of the last housing recession.
The chart below indicates the month that builders were surveyed. Builders were asked in the June 2020 survey whether they cut prices in May and those surveyed in May were asked if they cut prices the month before in April.