By now, many cities have classified residential construction as an essential business: an activity allowed to continue during the coronavirus-induced shutdown. This in itself may not be sufficient to keep construction going, however, and some jurisdictions have also started to allow virtual inspections as an attempted remedy.
Data on these trends were collected recently through questions on the survey for the April 2020 NAHB/Wells Fargo Housing Market Index (HMI). The first question asked about the classification of residential construction. In response to the advocacy efforts of NAHB and other construction organizations, the Department of Homeland Security has classified residential construction an “Essential Infrastructure Business” in its March 28 guidance. Individual state and local governments are not required to follow the guidance; but, as the HMI survey shows, 78 percent of builders report that residential construction has, in fact, been classified as essential in the areas where they build.
Even if construction activity is permissible during the shutdown, effects of the coronavirus may inhibit it, or at least slow it down, in a number of ways (listed recently in an April 9 post). It is therefore not surprising that, as shown in last Friday’s post, the virus has caused nearly half of home builders to put projects on hold. One possible bottleneck is availability and willingness of workers at the local building department to perform construction inspections. According to 2013 NAHB research, the median single-family home requires 8 different inspections while it is being built, and some require 15 or more. So availability of inspectors can have a significant impact, and 82 percent of builders recently reported that the virus pandemic has had a noticeable, adverse effect on how long it takes the local building department to respond to a request for an inspection.
The April HMI survey investigated two ways local building departments may try to alleviate the problem: by allowing third-party and virtual inspections. Although some building departments do, in fact, contract with third parties to conduct construction inspections, only 4 percent of builders say this has started happening recently in response to the pandemic (compared to 23 percent who say third-party inspections were already standard operating procedure pre-virus). On the other hand, 20 percent of builders say their local building departments have started to allow virtual inspections recently, specifically in response to the current emergency.
Keeping residential construction going during the virus-induced shutdown has a number of benefits to the U.S. economy, including generating enough work to keep 2.9 employees working full-time for a year every time an average single-family home is built.