Published by CNBC, July 13, 2020
Written by Diana Olick
It is the perfect storm for the nation’s Home builders. A sharp decline in the supply of existing homes for sale, increasing consumer preference for brand-new, high-tech homes with all the amenities for working and schooling, as well as an accelerating flight to the suburbs and exurbs made for remarkable housing demand in June.
While the official government count isn’t out until the end of the month, sales of newly built homes jumped 55% annually in June, according to a monthly survey by John Burns Real Estate Consulting, which has historically mirrored the U.S. Census report. It was the largest annual gain since homebuilding began again following the epic housing crash a decade ago.
It is also the highest pace of sales growth since the height of the unprecedented housing boom in 2005. That expansion was driven by negligent lending in the subprime mortgage market. This boom appears to be driven by the coronavirus pandemic.
“The anecdotal evidence is overwhelming. Sales in the distant commuter areas are the most robust,” said John Burns, founder and CEO of JBRC. “I believe a lot of computer-oriented people have proven to their co-workers that they can be productive from home, and have sensed, or officially been given the green light, to work from home at least a significant portion of the time after a vaccine has been found.”
That sentiment was mirrored in a survey by Arizona-based builder Taylor Morrison, which reported a 94% annual jump in June home sales. High-tech homes, and additional rooms for working and home schooling, topped the list of consumer demands.
“There is a bias to new. When I look at the research that our teams have been doing over the last 12 to 14 weeks, people are quoting, they want new, fresh, a place where wellness features will really make sense for them,” said Sheryl Palmer, CEO of Taylor Morrison recently in an interview on CNBC’s “Closing Bell.” “Most recently, we’re really seeing a pickup in folks saying they want more rural or suburban locations. Initially, there was a lot of talk about that, but it’s really coming through our buyers today.”
Sales of new homes were strongest in the Northeast, with an 86% annual jump, and in Florida, where sales popped 84%, according to JBRC. California saw gains, but it was the laggard.