Happy (Homeowner) Days Are Here Again

Article by John Wagner Jr from Wagner Logistics published on June 6th

It wasn’t that long ago that many homeowners were in deep depression over the negative value of their homes. Happy days seem to have returned, with the National Association of Realtors (NAR) reporting sales of existing homes increasing 0.6 percent in April, to the highest level since the end of 2009. Single-family home sales jumped 1.2 percent while multifamily home sales dropped 3.3 percent for the month.

NAR also said the median price of a single-family home increased 11 percent year over year in April and that sales would be even stronger if buyers had better access to credit. It appears the inventory of homes has declined, turning this into a seller's market.

One concern is that the growing cost of home ownership and continuing tight credit will present a significant challenge for the first-time homeowner.

Consumers are feeling much better according to two attitude surveys. The Conference Board’s index jumped to 76.2 in May from 69 in April, the best level since February 2008. The Thomson Reuters/University of Michigan index of consumer sentiment increased to 83.7, the highest reading since July 2007, up from 76.4 in April.

In addition, the Conference Board’s gauge of the economic outlook for the next three to six months, the Leading Economic Indicator (LEI), gained 0.6 percent in April, more than forecast and the biggest jump in 10 months.

So what is the effect of these warm feelings from consumers? Retail sales and durable goods orders are starting to look better.

The Commerce Department said that durable goods (longer-lasting products) were up 3.3 percent to a seasonally adjusted $222.6 billion in April, suggesting the manufacturing sector is humming along again. Most of the increase was driven by aircraft and related parts orders. When those transportation categories are removed, durable goods orders were up 1.3 percent – still a nice trend when coupled with better retail sales.

According to Commerce, April retail sales crept up by 0.1 percent from March to April, an improvement from the 0.5 percent drop in March. When one strips out gasoline sales, retail spending was up 0.7 percent. Department store sales increased 1 percent, apparel was up 1.2 percent, and auto sales increased 1 percent.

On the Road

Produce season is running later than normal due to weather, so truck capacity is tight in the southern states. No critical shortage of trucks exists at this time but all eyes are on the calendar looking toward July 1, when the new hours of service rules go into effect. The new rule is expected to impact fleets by causing a productivity loss of 5-10 percent, depending on the fleet characteristics.

To combat the HOS effects and the continuing driver shortage, motor carriers are increasing their use of intermodal. The American Association of Railroads showed a 2.7 percent increase in week 20 year over year. Carload traffic increased 0.6 percent year over year. 


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