U.S. homebuilder sentiment in April dipped to its lowest level in over seven years. It was the steepest monthly decline in the 30-year history of the National Association of Home Builders/Wells Fargo Housing Market Index.

It is easy to see why confidence has cratered. Even though construction has been deemed an essential service in all but six states with stay-at-home orders, at least 3,180 U.S. construction projects have been canceled or delayed, as of April 15, up 132 from only the day earlier, according to Construction Connect, an Ohio-based construction management software company. 

Disrupted supply chains and rising unemployment pose increasingly large hurdles to the construction industry during the coronavirus pandemic, and many residential and commercial builders are canceling or delaying projects altogether. 

Six states — Washington, Michigan, Pennsylvania, New York, New Jersey and Vermont — have halted residential and commercial construction as part of their stay-at-home orders. In fact, 27% of contractors said a municipal, state or federal government had ordered them to halt or cancel construction projects, according to an Associated General Contractors of America (AGC) survey of 1,640 residential and commercial contractors from April 6 to 9.  Most of the closures are handed down from private investors and owners. Over half of the contractors say projects have been voluntarily canceled by companies.

“You have to think about constraints on funding sources, like banks. Cash is the bloodline of a project. When you start constraining blood flow, you will have real problems,” said Wayne Maiorano, partner at Smith Anderson, a law firm in Raleigh, N.C. 

Looking ahead, disruptions are likely to continue, since the pipeline of new projects likely won’t break ground during the pandemic, said Maiorano, who specializes in construction, development, land use and zoning.

“You are going to see a big dip in new projects. All of our projects are all on hold,” said Doug Brien, co-founder and CEO of California-based MYND Property Management, which has about 8,000 units in 15 markets across the U.S. and offers construction management to its clients.

Over half of the surveyed contractors reported furloughs and layoffs at their firm, according to the AGC. 

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