Housing Market: A bright spot for builders


The U.S. housing market had a strong year in 2019. Driven by low unemployment, rising wages and low mortgage rates, consumers have been in the mood to buy. Because many areas are suffering from low inventories of available home, homebuilders are seeing an increased amount of activity as well. Analysts often look at three key indicators to gauge housing trends.

  1. Builder confidence

    As measured by the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), was at a 20-year high in December.1

  2. New home sales

    The news around new home sales has been varied but trending positively. While contracts for new single-family home sales dropped for a period in 2019, they were moving in a positive direction in the fourth quarter, with the three-month moving average at a post-recession high.2 Most analysts view this as a positive sign going into 2020.

  3. Residential construction

    Building permit data can also reveal residential construction trends. Over 2019, there was a slight decline nationally in the number of single-family permits issued, but when you look at the regional and state data, the story is varied. Many southern states, for example, have shown positive growth as have Minnesota, Iowa, Idaho and Wyoming.3

As we enter 2020, the news appears to be positive and most economists predict the housing market will improve at a modest pace. Two key concerns may temper expectations, trade issues and labor.

Trade issues continue to be a lag on the residential construction market, highly dependent on foreign sources of material.

The bigger issue, in the short term, may be around labor. Construction companies are still suffering from a labor shortage. Employment issues cause delays and force change within the industry. Some companies are looking at construction practices, for example, relying on factory-made modules to decrease the need for as many workers.

From building materials, trade-in or model homes to scaffolding and construction forms, our dedicated Residential Construction team will work with you to customize an insurance solution based on your situation.

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