Despite economic uncertainty related to the COVID-19 pandemic, 2020 was a record-breaking year for the U.S. housing market. New home sales increased 18.8% in 2020, while existing home sales rose 5.6% due to record low mortgage rates, favorable demographics and a shift in demand to suburban and rural markets.
Building permits and housing starts posted gains of 4.8% and 7.0%, respectively. In December 2020, new applications for building permits were up 17.3% from the prior year and 4.5% from the prior month, to levels not achieved since 2006.
Single-family starts drove the increase, rising 11.7% from 2019 to 2020, while multifamily starts were down 9.3% year over year.
Remodeling activity remains strong due to the upward trajectory of home sales, home equity and time spent at home. Spending for improvements and repairs to owner-occupied homes increased 3.5% in 2020 and will likely grow 3.8% in 2021.
Strong demand and low inventory levels drove home prices higher in 2020, with all cities reporting data in the 20-City Index notching gains on a year-over-year basis.
The Canadian housing market saw similar gains as the U.S., driven by low mortgage rates and a shift into larger homes to ride out the COVID-19 pandemic.
Finally, the performance of stock market indexes for homebuilders, building products manufacturers and building products distributors outperformed the S&P 500 over the past 12 months, reflecting investor confidence in the near-term future of the industry.
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