U.S. Housing and COVID-19 Market Effects and Policy Responses Kurt G. Usowski, Ph.D. Deputy Assistant Secretary for Economic Affairs U.S. Department of Housing and Urban Development
Economic Effects of COVID-19 in U.S.
• Jobs Lost March and April: 21.4M, 14.1% -
Job losses across nearly all industries
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Reduction in employed 22.4M
• Unemployment Rate April 14.7% Employment/population 51.3% 6.4M reduction in labor force
• 78% of unemployed report temporary • 7.5M classified as employed (but absent)
National Policy Responses
• One-time stimulus payments • Enhanced unemployment insurance benefits • COVID-19 forbearance and foreclosure moratorium
- Support for mortgage servicers
• Eviction moratorium, no late charges -
Also, state and local
• Additional funding for subsidized housing • Additional funding for homeless programs
Housing Market Impacts So Far
• Housing payments (April) -
Mortgage Forbearance: 3.8M loans, 7.3%
-
New home sales down 15.4%
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Single-family starts down 17.5%
Rent Payments: slight delays, but mostly in full
• Housing sales slowdown (March) Existing home sales down 8.5%
• Construction slowdown (March) Multifamily starts down 32.1%
Why?
• Housing payments - Federal income support worked! - Multi-earner households (49.1%) - Huge drop in consumer spending (except food)
• Housing sales slowdown
- Social distancing disrupts usual practice - Will technological change accelerate?
• Construction slowdown
- Included in some business shutdowns - Strong builder pessimism
What’s Next?
• How long will the slowdown last? - Who’s driving, government or consumers? - Additional income supports needed?
• How will the economy change? -
More change = slower recovery? Will new housing demand patterns emerge?