Why Housing is Rebounding

What a way to start December!

Despite what industry naysayers have predicted… the market took a big turn for the better. Now, one week does not a stock market make, but consider the recent automotive and construction numbers, and how these have affected the home & building industry.

If these two areas of commerce are any indication, the new year is shaping up to be a much more positive one. Our economic state has as much to do with our psychological and emotional feelings toward recovery as it does with hard numbers. People spend when they feel optimistic about the future. Perhaps Black Friday’s success played a role in recent stock market upticks as well as those in construction, home and auto sales.

Why pickup trucks are hopeful

November’s automotive numbers were recently released, noting that almost all automakers saw a rise in sales.

  • Ford saw a 20% overall gain in November, with truck sales up 34%
  • Chrysler’s Ram truck sales rose 67%, while its Ram heavy-duty trucks more than doubled in sales, reaching an 88% growth
  • Almost every automaker reported double-digit sales gains in November

Light-duty trucks were recently responsible for 54% of all new vehicle sales. What’s noteworthy about increasing pickup truck sales is that unless you’re making an obscure fashion statement… there’s only one reason to have a pickup truck: to haul building materials. Increased truck sales demonstrate the demand from commercial customers. Isn’t it interesting to see that construction spending has seen an upturn recently as well?

Construction Spending

October construction spending crushed expectations, rising 0.7% month over month… as expectations were for a decrease of 0.4%. This is the second positive month in a row.
The rise was due in large part to residential construction and government building projects. Both public and private construction in October saw spending increase 0.4 and 0.8 percent, respectively, over September’s estimate.

Housing
Pending home sales, according to the National Association of Realtors, jumped 10.4% from last month, the largest gain on record. Rebounding housing numbers are arguably the best support we have for an economy that follows suit. The Dow Jones, NASDAQ and S&P 500 all reported higher, increasingly positive points earlier this week – all around the one percent mark. Thursday in particular saw better-than-expected retail and home sales, contributing further to boosted confidence.

October’s home remodeling soared 6.2 percent, illustrating the continuing trend of U.S. home owners choosing to remodel rather than purchase new homes.