Fleet Management News & Business Info | Commercial Carrier Journal
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JOURNAL TRUCKGAUGE A home run for trucking? Housing's recovery appears solid and sustainable New-home inventory New houses for sale at end of year, in thousands 1963-2012 600 500 400 300 200 100 0 1965 1970 1975 1980 1985 1990 Houses for sale 1995 2000 2005 2010 Long-run average Note: 2012 figure based on November 2012 data Source: U.S. Census Bureau U.S. homeownership rate Percentage of households owned by occupant, 1965-2012 70 69 68 67 66 65 64 63 62 61 60 59 1965 1970 1975 1980 1985 1990 Quarterly rate 1995 2000 2005 2010 Long-run average Source: U.S. Census Bureau Existing-home inventory Months supply at that month's sales pace 12 9 6 3 2009 2010 2011 2012 Source: National Association of Realtors What's happening in 2013? This is a critical year for trucking and the economy as we see whether the recovery continues or fades away. For insights from key analysts and the latest economic indicators, go to http://bit.ly/truckingoutlook or scan the QR code with your smartphone or tablet. Plus, you can download a Randall-Reilly Market Intelligence report summarizing research on trucking companies' expectations and plans for 2013. 16 COMMERCIAL CARRIER JOURNAL CCJ0213_AVERY_Truckgauge.indd 16 H ousing starts in December were at their highest level since June 2008, according to preliminary figures from the U.S. Census Bureau. While month-to-month data remains choppy, housing starts have been up by double-digit percentages year over year every month since October 2011. Is this a temporary phenomenon – a brief blip in a long-term lackluster market? Not likely. Several developments suggest a sustained recovery in housing, although not one that will match the overheated market of the mid-2000s. First, homebuilders clearly see more construction ahead. Permits authorized for new residential housing are at their highest level since July 2008 and have risen year over year every month since May 2011. That's no guarantee of growth in housing starts, but it's certainly a strong indicator. One reason for this confidence is a tightening inventory of houses for sale. It wasn't that long ago that a glut in housing seemed practically permanent. But according to the National Association of Realtors, the current supply of existing homes for sale is just 4.4 months based on current sales rates; that's the tightest inventory since the height of the housing market in May 2005. As for new homes, the inventory – 149,000 units at the end of November – hasn't been this low since the Census Bureau began keeping records in 1963. If demand increases, tight inventories will spur accelerated growth in housing starts, and there's every reason to believe this will happen. Employment is one of the biggest factors in housing demand; while job growth remains fairly sluggish, the U.S. economy has added jobs every month since October 2010. First-time claims for unemployment BY AVERY VISE insurance dropped to their lowest level in five years in mid-January, although that's a volatile indicator. Lawrence Yun, chief economist for NAR, credits primarily the employment situation for the rebound in home buying. "Momentum continues to build in the housing market from growing jobs and a bursting out of household formation," Yun says. Another consideration is the rate of homeownership. Over the long run, 65.4 percent of households are owned by their occupants. Since 1996, the homeownership rate has been above the trend line, peaking at 69.2 percent in 2004. Since then, the rate has fallen sharply but is now near the historic average and likely is stabilizing. The one big unknown is the effect of our aging population. The Census Bureau projects that between 2010 and 2020, the U.S. population will grow by only 8.1 percent, but the over-65 crowd will surge by 39 percent. These people undoubtedly will downsize, but will that mean new construction of condos, garden homes and assisted-living facilities? Or will we mostly see a churn as empty-nesters and newlyweds essentially swap homes? With other fundamentals pointing toward more housing starts, the home-buying decisions of the Baby Boom generation could determine the fate of residential construction for the decade to come. AVERY VISE is executive director, trucking research and analysis for Randall-Reilly and senior editor, industry analysis for Commercial Carrier Journal. E-mail avise@truckgauge.com. | FEBRUARY 2013 1/24/13 2:46 PM