The housing industry was front and center in the collapse of the economy that caused the Great Recession of 2007-2008 and even if it is not quite the centerpiece of the coronavirus pandemic economic crisis it will suffer some of the pain and troubles as it tries to recover along with the broader economy.
With new housing construction, housing sales and other related activity so critical for sales of home furnishings products, including lighting, it’s key to understanding business prospects for the back half of the year and into next.
Here’s the big news: The outlook could be more encouraging than many people think.
First off, the housing market took a huge hit just like every sector of the economy. Existing home sales fell 18% in April, the last month statistics were available at LightSource press time, and new home listings plummeted by as much as 80% at the bottom of the economic shutdown.
But, curiously enough, the median listing price for houses for sale across the country was up 1.4% in early May and Redfin, the real estate brokerage firm, reported that 41% of all purchase offers were part of a bidding war. How could either of these be possible during an economic meltdown, one could ask?
The answer is the same one that it’s been for the past several years and one of the most basic tenets of economics: the law of supply and demand. Even as the country shut down, the number of people looking for a home, however much reduced, exceeded the number of homes available.
That’s why the people who make a living off of monitoring these things don’t see a repeat of the long, slow climb-out the housing market endured after 2008. They caution however that double-digit unemployment and possible return spikes of the coronavirus are wild cards that probably indicate things will not get back to normal as quickly as some would want.
The other positive indicator for housing – and home furnishings – is the strength being shown in the home improvement and remodeling sector. Both The Home Depot and Lowe’s have shown good sales gains this spring and if you buy into the theory that people will be spending more time at home this year and subsequently spending on their houses will increase, that also points to good news for the industry.
There’s a still a long way to go before any part of the economy returns to pre-pandemic levels. But for once it appears that housing – and home furnishings – will be towards the top of that list…rather than at the bottom.