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Inside the Numbers Are homes where the health is? By Avery Vise avise@randallreilly.com A s the United States' economy seems to be steadily, if slowly, improving, a couple of threats lie outside our borders. First, the European debt crisis ap- pears far from resolved, and there's still a chance for a fi nancial crisis that could spark a recession that could hurt our fi nancial markets and our exports. And an apparent slowdown in China likewise could hurt our industrial production. For nearly three years, the U.S. manu- facturing sector has been expanding. Although domestic business investment in durable goods and consumers buying automobiles have fueled and continue to fuel that growth, a global recession could dampen or even reverse the trend. be in sight, if not necessarily around the corner. Th ree key metrics released in May Housing starts were up 2.6 percent in April over March. were positive: Sales of new home single-family homes increased 3.3 percent. Sales of existing homes rose 3.4 percent. "It is no longer just the investors who are taking advantage of high aff ordability conditions, " says Lawrence Yun, chief economist for the National Association of Realtors, which tracks the sales and prices of existing homes. "A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery An improving housing market could help offset global woes. Fortunately, there are few signs to date of any slowdown in manufactur- ing. For example, the Institute of Supply Management's new orders index is strong and improving. But one thing we have learned in recent years is not to take anything for granted. For nearly fi ve years now, the biggest single drag on the U.S. economy has been construction, especially residen- tial construction. But now, with global pressures threatening to short-circuit our shaky recovery, there are some signs that a recovery in the housing market could appears to be extending to home prices." Due to reduce inventory, former buyers' markets are more balanced, and some areas have become a seller's market, Yun says. Understand that a recovery in hous- ing doesn't mean construction at the rates we saw most of the last decade. We all know quite well by now those rates were far from sustainable. But even getting back just to the long-term trend since 1959 of 1.5 million housing starts a year represents a more than doubling of the current rate of construction. It's reasonable that housing would be- gin to recover. First, there has been little increase in the housing supply for more than three years. Meanwhile, employ- ment has risen. While the nation remains 5 million jobs below the January 2008 peak, we are 3.8 million jobs above the February 2010 trough. And 1.8 million of those new jobs came in the past year. Most of what you hear about the labor market is that the unemployment rate is too high. Th at's probably true, but for the housing market and, really, for trucking, what matters more is the economy is adding jobs. Th ink of the college graduates fi nally moving out on their own, for example. Of course, every silver lining comes with a dark cloud, however small. A growing residential construction market typically draws labor from the same pool that supplies truck drivers. Even with a weak housing market, how- ever, trucking companies are struggling to fi nd enough qualifi ed drivers. In the April 2012 Randall-Reilly MarketPulse survey of trucking conditions, nearly 55 percent of trucking executives identifi ed driver availability as their top concern. Lack of drivers is holding back growth and perhaps even some replace- ment. "Th ere's no sense adding trucks if we can't fi nd qualifi ed drivers to operate them," said one executive. "Can't hire drivers or would grow, " said another. All in all, however, a housing recov- ery is defi nitely something to hope for. Avery Vise is executive director, trucking research and analysis for Randall-Reilly Business Media and Information. 44 TRUCK PARTS & SERVICE | June 2012