
In the past two weeks, new COVID-19 cases have spiked across a number of states, including Arizona, California, Florida, and Texas. State and local leaders are urging residents to stay at home and wear masks, and a number of businesses that have recently reopened are shuttering, either preemptively or due to staff testing positive.

“We have to weigh our options,” says Ali Wolf, chief economist at Meyers Research, regarding the "animosity" around wearing a mask in this week's COVID-19 Update Webinar. “Shutting down the economy again because of an increase in hospitalizations will be destructive. I don’t want to sell that short. In some cases, that will be impossible to recover from … So wearing a mask is really hands down the best option we have for the economy right now, because we have to remember that the only reason the economy is slow is because of COVID-19. Our unemployment rate was 3.5% back in February. And getting past this is our best way to see normalcy again.”
The European Union is considering a ban on travel from Russia, Brazil, and the United States, owing to ongoing high COVID-19 infection levels. Governors in New York, New Jersey, and Connecticut have mandated a two-week quarantine for anyone traveling into their states from high-infection areas. In a silver lining over this situation, over 130 vaccines for COVID-19 are currently in development—any one of which could lessen the virus threat once available.
This week, the National Association of Realtors reported that existing home sales had fallen 26.6% in May. Despite the size of this number, Wolf notes that it refers only to closings, which come from contracts signed in March and April. At the same time, purchase applications have risen 12% year over year, and new-home sales are going strong.
Wolf says that we could be at the end of a “technical” recession, according to the National Bureau of Economic Research, which defines a recession as running from “the peak of a business cycle [through] the trough.” Some sectors of the economy are starting to recover; retail sales have risen 18% month over month, up from a record drop in March but still down 6% YOY. Online retail spending has risen 31% YOY, while overall retail has fallen 4% YOY.
Unemployment rates are falling across the country month over month, led by Mississippi at -5.7% and Kentucky at -5.6%. Nevada, one of the hardest hit in terms of employment, has seen a 4.8% drop in its unemployment rate, down to 25.3%. Nevada still has the highest unemployment rate at the state level, while Nebraska has the lowest at 5%. Unemployment rose or fell flat in seven states month over month, led by Minnesota, where unemployment rose 1.2% to 9.9%.
Thirteen weeks in, while job losses are slowing, more than 1 million people are filing initial jobless claims each week. Continued claims stand at 20.5 million as of June 18; Nevada and Washington state have the highest concentrations of continued claims at 20% each.
Local Housing Markets
Nearly every single major housing market has posted a month-over-month increase on the Meyers Research New Home Pending Sales Index. Las Vegas led the nation with a 90% MOM increase in new-home pending sales, followed by San Jose at approximately 75% and San Francisco at 60%.
On a year-over-year basis, Indianapolis has posted the strongest new-home pending sales growth at 16.5%, followed by Houston at just over 12%. Wolf notes that many of the top markets for new-home PSI are also among the top markets for positive domestic net migration over the last several years.
At the same time, with resale inventory down 30% YOY nationwide, new-home builders may be the “only game in town” in many cases. In almost every major new-home market, new-home builders made up a larger share of total closings in April 2020 than they did in April 2019.
Laid out by sector, the “shape” of the economic recovery varies widely. Housing, auto, and retail sales are in the rebound of a “V-shaped” recovery. Other industries, such as in-person retail, manufacturing, and hotels, more closely match the “swoosh” recovery shape—and concerts and sporting events have crashed to the bottom in an L-shape.
According to Wolf, this raises the question, can the V-shaped recoveries remain stable in the face of “swooshes” and “Ls”? While Wolf believes the housing market is likely to remain stable, owing to housing’s role in keeping residents safe, she quotes Federal Reserve chairman Jerome Powell in saying that a full recovery is “unlikely” until the disease is contained.
Consumer spending is itself off -8.9% YOY, up from over -30% YOY just a few weeks ago. In particular, spending from low-income earners is only off -2.8%, while spending from high-income earners has fallen 13.3%.
Real-Time Housing Stats

“COVID-19 is hurting business, all businesses,” says Tim Sullivan, senior managing principal at Meyers Research. “So if we have the choice between masks and social distancing versus closing down, I think it’s a relatively simple choice—masks and social distancing make sense.”
Based on data, surveys, and conversations with builders across the country, Meyers Research has observed a less “frenzied” home pace in June, but still a trend of strong sales. While demand remains high, low inventory is constricting the new-home market’s ability to grow.
Fifty-four percent of builders surveyed by Meyers still report that their contract volume is slightly or significantly improving over the past week. This is up from 43% last week and 66% two weeks ago.
Forty-one percent of builders report that they had kept base prices flat week over week, while 59% report they had increased prices—up from 9% just six weeks ago. Five percent had increased incentives week over week, and 11% report a rise in cancellations.
When asked why builders believe their consumers are buying new, 80% attribute their interest to improved affordability thanks to low mortgage rates. Fifty-six percent cite limited resale supply, and 30% say they prefer new homes as “safer” environments.
Expectations are mixed for the next three months. On the local level, 45% say they believe sales will remain at this level, while 24% anticipate a decrease and 27% anticipate an increase.
Over the course of the pandemic, Las Vegas—one of the hardest-hit markets—has experienced a “remarkable turnaround” in new-home sales. The market has moved from over 1,000 new-home sales per month in January and February to fewer than 250 in April, then back up to over 750 in the first three weeks of June. Sullivan attributes this rise to a lack of state income tax, as well as a large concentration of big public builders in the market, who are able to quickly pivot to virtual marketing and shift their pricing.
Trends We Are Watching
The NAHB/Wells Fargo Housing Market Index, which measures builder confidence, has rebounded in a V-shape over the course of the pandemic, up to a reading of almost 60. The curve of builder confidence almost exactly matches current sales and expected sales over the past three months.
According to data by BDX, traffic to builders’ websites has risen by 32% YOY as of this week, following a slight dip at the start of May. At the same time, out of the subdivisions tracked by Zonda, active projects have fallen by 8% YOY, while quick move-in home numbers have fallen 10% and unsold detached lots by 4%. The current quick move-in supply is 19,565 homes, which Sullivan notes is akin to a 10-day supply in the current selling environment. At the same time, 39% of builders report a slight increase in cycle times.
When asked about the floor plan design changes they might be considering in response to the COVID-19 crisis and the way it has reshaped the role of new homes, over one-third of builders—34%—report that they are considering more defined office or workstations. Twenty-five percent are considering additional flex spaces, and 20% are considering additional tech. Other considerations include workstations for kids, enhanced outdoor living, extra storage, defined gym space, and defined zones for family living.
The next COVID-19 Update webinar will take place on July 87g at 2:00 PM EST / 11:00 AM PST. Click here to register.