The Data Behind The Data on The Housing Market

A lot has been mentioned recently about the housing market and how quickly it appears to be rebounding.  It feels as if the entire country woke up in unison and decided to all go buy a house.  Feels like 2006 all over again right?

Well, not so fast.  It is important to understand where we are coming from and what the possibilities really are.  The graphs below from Northern Trust tell an interesting story:

Home sales, while increasing are still very anemic as compared to the "go-go" days of 2006.  I would never expect it to get back to that level so those who are saying, "when will housing come back" should be asking themselves, "back to what".  Further, you can see existing sales are increasing faster which generally does not have the same multiplier effect on the economy as new construction.

Behind the numbers of the existing sales also includes investors buying homes or blocks of homes to rent.  That element further reduces the multiplier effect.  And, finally, the drag on the economy of incredibly tight lending criteria means it will be a long time, if at all, that we get back to even 75% of the growth days.

Watch this closely, it is good to finally feel good, but don't get burned with unreal expectations.

Unemployment Claims Plummet

The singular biggest metric to watch for business activity (IMHO) is the first time unemployment claims number.  This number is going down consistently which means business activity will pick up.  Unemployed people will begin working and employed people will feel more confident.

The graph below from Northern Trust tells the story:

Since September we have been going straight down with the initial claims.  Don't let the naysayers fool you by saying "people are dropping out of the market".  These are first time claims so just about everyone files their initial claim.  Firing slows way down and therefore we know the economy is stabilizing.

Good news for everyone and especially trucking and logistics firms.  More workers, more confidence, more buying, more freight.. it is that simple.