Housing growth expected to continue despite COVID-19 fears – study

Research indicates that housing will be one of the US economy's brightest spots in 2020

Housing growth expected to continue despite COVID-19 fears – study

Despite concerns of an economic slowdown from the global outbreak of COVID-19, the US housing sector is expected to continue its growth trajectory in 2020.

A study from financial services firm Nationwide revealed that most housing markets in the US showed a positive reading with limited pockets of negative performance. Nearly 60% the 400 metropolitan statistical areas evaluated by the study achieved a positive housing market ranking in the first quarter of 2020. And of the 233 markets with a positive ranking, Nationwide classified 214 as “plus-one” and a further 19 as “plus-two,” with a maximum value of plus-four.

Across the country, only 29 metro areas fell into the negative category, with 138 metro areas in the neutral category.

“While the risk has significantly increased that the coronavirus outbreak will disrupt economic activity, our research indicates that housing will be one of the economy's brightest spots in 2020,” said David Berson, vice president and chief economist at Nationwide. “Strong, underlying housing-demand factors – including above-trend household growth, solid job gains, and declining mortgage rates – are driving what is looking to be a strong annual performance."

However, Berson pointed out that there are still risks on the horizon due to looser underwriting standards for government-insured and jumbo loans.

“FHA and VA loans now comprise more than 23% of the nearly 40 million mortgages in the US – the highest share since 2001,” said Berson. “While delinquency rates for these government-insured and jumbo loans are low today, deteriorating economic conditions could put these loans at rising risk.”