Jack Rutherford served as an intern for the NAHB Economics Group during the summer of 2020. He authored the following post.
COVID-19 Pandemic Impact on Global Construction and Housing Sectors
The impact of COVID-19 on the home building industry is a key concern for most, if not all, countries. There are common vulnerabilities in the global home building industry that are being exacerbated by the pandemic. Moreover, the extent to which these industries are interconnected has never been so deep. The supply chains of labor and materials in one country are dependent on the availability and manufacture of these materials in another. Countries that have had similar public health responses have also seen similar setbacks for construction.
To examine these common outcomes, data is utilized from the International Housing Association (IHA). The IHA provides an international forum to address globally significant issues identified by the member countries relevant to the housing sector. IHA surveyed its members to assess the impact COVID-19 on the housing sector, and of the 13 countries that participated in the survey, the majority responded that the COVID-19 crisis had a significant negative impact for their home building market.
Furthermore, COVID-19 has had a notable impact on planning and time-sensitive functions. These adverse effects may be attributed to the transition away from in-person business and towards a more online and remote form. It can also be inferred that the introduction of workplace safety measures and public health guidelines require resources and attentiveness that has slowed the various aspects of construction. In the U.S., for example, these changes have accelerated housing demand, while pushing lumber prices to new highs.
The extent to which Covid-19 has affected the housing industries of various countries is being closely monitored by the NAHB and the IHA. As the pandemic transforms markets in each country, strengths and weaknesses of building industries in each country will shape future outcomes.
The chart below represents the most shared threats and opportunities facing home building industries around the world. This data was consolidated from the IHA’s 2020 Annual Meeting. The commonality of the challenges, such as the skilled labor shortage, are a reminder of the common global impacts of technological change, government regulations, and demographics impacts on housing demand.
|Taxes on new construction||Efficiencies in build process|
|Housing finance||Large labor force|
|Obtaining permits||Low interest rates|
|Bureaucracy and Regulation||Increased housing demand|
|Skilled labor force decline||Foreign investment|
|Increasing materials costs||Digitalization and information exchange|
|Growing inequality||Government incentives|