The Builder’s Digest

Chief Economists on Reopening U.S. Construction [Hanley Wood Webinar]

Posted by Chandal Nolasco da Silva on May 8, 2020 3:19:57 PM

We sat in on the Hanley Wood webinar on Monday, May 4th titled The Big Reset -- Supply, Demand, and Animal Spirits.” The presentation tackled big questions facing builders right now, like are we ready to reset? And, what does recovery look like? To help answer those questions, Chief Economists were featured such as Robert Dietz from the National Association of Home Builders (NAHB) and Ali Wolf from Meyers Research.

The webinar was presented by Hanley Wood as part of the #BuildersAreEssential series put on by the Hanley Wood Media Coronavirus Construction Center. If you didn’t have a chance to attend, don’t worry, we packaged everything you need to know here.

Navigating Foreclosure or Recovery

Builders in this moment are faced with either navigating foreclosure or holding on and leading the recovery. Experts in the webinar quoted Bon Jovi when they said the scenario in the US is like “living on a prayer.” Conversation ensued between guests as they debated whether this reset is the beginning of the end of COVID-19, or the end of the beginning. Everyone agreed though that heading into reopening, if builders can’t socially distance, they should have the proper equipment, or stay closed.

Some sectors of the economy are eager to return to work, but need to know what to expect so they can plan and budget properly. Yet no one knows exactly how the next couple months will unfold, or how well re-openings will go, or if there will be another shutdown. That said, smart people get paid a lot of money to forecast different scenarios that could happen. Experts in this webinar did exactly that and provided data-driven advice that can help builders think their way through possible scenarios in the next 12 months.

NAHB Expertise From Robert Dietz, Chief Economist

Rob Dietz, Chief Economist at the NAHB, reminds us that housing is affected by some recessions and not by others. He also reminds us that before the US entered this recession it was in a growth pattern.

May Blog Hanley Wood Webinar Coverage-12

And while this is optimistic data, Dietz says he worries about a W-shaped recovery in the coming months, as well as new localized lockdowns later this year. He advises builders to plan for two months, two quarters and two years.

Of course his modelling and predictions are based on the current 8-9 week pause. Further delays would change the outcomes for the building sector in the coming year.

Overall, Dietz expects a weak mid-year economic performance and a terrible next two months, but that the building sector will bounce back later in the year. Builders could see a stronger fourth quarter rebound and repair leading into the first quarter of 2021.

May Blog Hanley Wood Webinar Coverage-13

The focus for the near term should be stability, and builders shouldn’t expect to see a full recovery in the macro-environment for another two years. Rob explained that’s because the virus is much more widespread than we can track, showing an S-shaped curve, which means a longer passage through the population.

Rob points out some of the major downsides of the pandemic on the building sector that include:

  • Having to train new talent
  • Supply problems with materials like fixtures linked to the global supply chain
  • Diminishing financing, tighter lending conditions for AD&C loans

Some upsides he mentions include regulatory improvements for builders! As builders are recognized as essential contributors to our wellbeing as a society, regulatory bodies are improving conditions allowing for virtual inspections or offering greater flexibility. The current situation is also likely to increase domestic manufacturing, Dietz says.

He drilled down into the building sector to help untangle which sub-markets are likely to improve relative to others.

Single Family Starts
Single family starts are likely to recover and increase as people seek out medium-density housing.

Condos, Apartments, Townhouses
Condos, apartments, and townhouses are likely to decline as people leave high-density housing.

Rental Housing
With an increase of people looking for single-family housing and not necessarily having the means to buy, the single family home rental market is likely to increase. Growth will likely occur in suburban areas that are already serving urban ones:


Residential Remodelling
Remodelling is likely to do better than single family or multi family construction.


Meyers Research Expertise From Ali Wolf, Chief Economist

The US is facing unprecedented unemployment rates. Ali Wolf, Chief Economist for housing data and consultancy firm Meyers Research, says one in five Americans have been out of a job since February. And in some ways unsurprisingly, States with the highest unemployment rates are the first set to reopen, like Georgia and Michigan.



Wolf explains that economists never know how long a recession will go on, but they can define a start date around the peak of unemployment. With unemployment comes less spending.

Some sectors are being hit much harder than others, Ali explained. However housing and building she says is one industry that can easily become contactless.

That said, until the virus becomes less of an issue, Wolf says consumers are going to be less likely to invest in new projects and international investments will be down. Even people who have saved for home renovation may be diverting these savings to cover essential costs.

However, before the COVID-19 pandemic hit, Wolf reports that 35% of millennials were saving to buy their first home and that could lead to pent up demand coming out of the recession. She also agrees that people will want more of their own stuff in their own home, rather than in the community, like a gym for example. So that’s some good news, but there’s a lot of ups and downs.

In fact, Meyers Research has been talking to 100 construction executives per week since the shutdown began and the number one thing they’ve reported is inconsistencies. 50% of builders have reported better nets sales week over week, but these accounts are combined with mixed experiences of how sales are going. She said that some houses are still selling and that location and price still apply as primary selling factors. Also, builders who were focused on the 55+ housing sector, have come to a grinding halt. Another market that’s being hit hard is the snowbird builders who have missed their season entirely.

While most builders surveyed are holding steady with their prices, Meyers Research found that builders who have increased incentives did a bit better. Ali explains that since 60% of home buyers expect to get a deal in the recession, incentives are helping builders sell to weary consumers.


Ali says it won’t be a seamless restart and overall is predicting a v-shaped recovery, assuming everything reopens in May:

May Blog Hanley Wood Webinar Coverage-11

With a v-shaped recovery builders could return to pre-COVID levels in 1.25-2 years.


Ali closed the presentation with some wise-words. She says consumers will be fragile moving forward. Regardless, in the past it’s taken about 7-12 months for the housing sector to recover from a recession. However certain conditions need to be present. Hopefully the reopening will mean a rush of new home sales, and a drop in prices from existing sellers, further driving demand.

Building Even Better

The next couple of months are going to be hard on everyone, but the building sector is positioned to recover a lot sooner than some other markets if it reopens now. Improvements could be seen by the end of the year, and regardless some sectors will do better than others. Builders can help themselves by staying on top of how the recovery is unfolding, and also by offering incentives to customers who may need a deal to commit.

The host of the Hanley Wood webinar opened the presentation with a thought that is nice to close on. It's the notion that we will inevitably return to various forms of normal, but what was normal before isn’t good enough anymore. As a building community we’ll have to do better as we build tomorrow.


If you have any questions about the webinar content you can contact the Hanley Wood webinar team:



Image Credits

Featured Image: Unsplash/Etienne Girardet

All screenshots by author, taken May 2020

Image 1-13: Screenshots from Hanley Wood webinar

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