To access the most updated scenario analysis data, watch our recent webinar “Revealing What-If Scenarios of COVID-19’s Impact on Building Products Demand and Residential Construction Activity.” Data and analysis discussed in the webinar is updated as of April 30, 2020.

*Data and analysis below updated April 21, 2020

Principia Consulting is continuing COVID-19 coverage to track and calibrate the impact of the coronavirus on residential construction and building products demand. This update provides scenario analysis allowing custom exploration of the potential impact the virus and related closures will have on new construction activity. This analysis is fluid and will continue to evolve as COVID-19 progresses throughout the country.

Projecting the impact of COVID-19 on new construction is the source of much uncertainty throughout the industry. Two key sources of uncertainty are the length of time governmental restrictions will remain in place and the degree to which they will impact construction activity on the ground. Measuring the impact of the crisis accurately may take weeks or months depending in when data is released.

In lieu of hard numbers, contingency planning can help companies be prepared for a range of possibilities. Principia has developed a scenario assessment as part of its COVID-19 coverage that allows for a wide range of possible impacts depending on the length of time that various restrictions are in place and the magnitudes of reduction in activity. This analysis enables calibration of the impact on total industry revenue loss in in each geography.

Several inputs are available for change by the user: the decline in daily construction activity under the four groups of government restriction and the duration in days for all effects. The analysis starts with our annual housing projection for 2020 (down to the zip code level) prior to the impact of COVID-19. We use monthly seasonality in reported starts and permits to estimate the percentage of each state’s annual demand represented by a given day. Lastly, we apply the status and start date of government regulations in each state and municipality (see Bulletin #1 previously issued). A few takeaways:

  • April-July are the busiest month for new construction activity, accounting for 37% of starts over the past 5 years
  • Under our initial baseline scenario shown below, approximately 8% of nationwide construction activity for 2020 is lost
  • Due to a high number of states with most construction prohibited, the Middle Atlantic and Pacific divisions have the highest percentage loss of activity under most scenarios

*Data as of April 21, 2020

Principia will continue to update its COVID-19 coverage several times per week for the foreseeable future. In addition, effective immediately access to the ongoing impact assessment and scenario analysis is available on a paid subscription basis. The subscription enables building of product specific scenarios for each company and is highly useful for business and logistics planning moving forward.

Read our previous COVID-19 bulletins about the impact on residential new construction and the impact on residential building product demand. For more information about subscribing to our COVID-19 coverage, click here.