Residential construction firms can partially insulate themselves from a market correction by understanding that different factors—each with their own unique causes and timing—affect the single and multi-family housing market.
Over the last two years, the market for U.S. housing has undergone an unprecedented number of shocks, the sum of which has added up to a market that now looks vastly different. The lack of new home supply because of labor and material shortages among builders combined with a recently ended and nearly two-year-long moratorium on home foreclosures resulted in a significant undersupply of available homes for sale and consequentially soaring market prices.
At the same time that supply has been—and continues to be—uniquely challenged, the demand for housing of all types, and in particular single-family, soared. Onerous COVID-19 restrictions drove many out of densely populated cities and into relatively more spacious single-family homes largely in suburban environments.
Read more about how the sector has been impacted here.