Wednesday, September 28, 2022 5:09 am

NAHB chief economist provides economic update on impact of COVID-19; real estate consultant Jim Belfiore weighs in with ‘surprise.’

By Robert Dietz | NAHB Now

Despite the strong start during the first two months of the year, incoming data are now showing the negative effects of the sudden stop for the economy. There were 3.3 million new jobless claims this week as the service sector shed jobs due to government-imposed social distancing related shutdowns. In the week before, there were only 282,000. This is likely the start of a wave of 5 to 10 million newly unemployed in the coming weeks.

The decline in labor market conditions had an impact on consumer confidence as well. Consumer sentiment, as measured by the University of Michigan, fell from a level of 101 in February to approximately 89 in March, the lowest reading in three years. Sentiment will continue to decline as the economy experiences the ongoing affects of virus mitigation.

However, the stock market gave a vote of confidence to the $2.2 trillion stimulus bill, rising more than 10% for the week. Keep in mind that economic income is about $900 billion a month, so the legislation helps fill the gap from an eight-week pause of the economy (which is the assumption behind the current NAHB forecast). We are estimating significant declines for second quarter GDP, with an additional drop for the third quarter, followed by a rebound in the fourth in our benchmark forecast.

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“Traffic, as Mr. Dietz aptly point out, is falling- the result of builders shutting off foot traffic to sales offices.  However, surprisingly, despite sentiment moving sharply downward, a few builders reported in to us at the end of this week, that they managed to garner lower but fairly healthy sales levels in multiple newly opened communities.  The strength extended to waiting lists for limited lot releases within well-located and priced communities, providing some limited hope to the Metro Phoenix Area homebuilding industry being turned upside down by COVID-19.” ~Jim Belfiore, Real Estate Consultant

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