Kurt Usowski : US Housing and Covis -19

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%

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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?

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More change = slower recovery?

Will new housing demand patterns emerge?