Truck Sales Suggest Strong Outlook for Housing Market

As I noted in a prior post, activity in the consumer goods sector is often an indicator of health in the housing market. Major home supply retailers often see a jump in sales during or even before a rise in buyer activity. Scenarios like this can have spillover effects as well, with the increase in retail purchases and overall consumer confidence leading to profit surpluses and even job growth.

That being said, recent analysis suggests that activity in another area of the consumer economy might bode well for the housing market. According to a new story from the Washington Post’s Wonkblog, the recent increase in pickup truck sales might have some positive aftereffects for the property sector as well. Citing a recent report from TD Economics, sales of pickup trucks jumped a full 12% in 2013. All things considered, this seems the largest annual gain in light truck sales in years.

So What Does This Say About the Economy?

The purchase of pickup trucks has a deep correlation to planned increases in new home construction. Construction workers have a special reliance on certain makes and models to transport construction supplies and tools of industry, and often purchase additional (or up-to-date) vehicles in the case new building projects are on the horizon. The Washington Post analysis points out that since 1980, climbs and decreases in pickup trucks have correlated with subsequent rise in new home construction.

Extrapolating from this, TD Economics predicts that housing starts will rise to just under 1.5 million by 2015, a notable climb from the 927,000 recorded last year. The Washington Post analysis continues to suggest the recent downturn in new construction is temporary, and will recuperate in time for the major spring-summer homebuying season. In fact, Ford’s sales of their F-Series just had the strongest February in eight years, much of which was propelled by a sharp uptick in sales during the latter half of the month.

What’s the Takeaway?

Granted, truck sales are not a flawless indicator of housing market performance. There are abundant other reasons why pickup truck sales could be, well, picking up. The Washington Post story points out that the Detroit Big Three all just unveiled new models of their signature trucks, which is a good sign considering the companies’ previous lean years. But, on the other hand, it might create consumer interest far and beyond their typical workingman’s demographic. That being said, there’s a good chance that weaker home sales in January/February of this year were due to purchase exhaustion following the flurry of buyer activity in late 2013. With the cold weather and generally miserable climate conditions having kept buyers away, we could see gains in the housing market spring back as soon as May.

Photo Credit: al7n6awi

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.