New home sales in April could benefit trucking volumes and logistics activity

Amid the many worrisome economic indicators kicking around of late, something along the lines of good news came about this week in the form of United States new home sales data, issued by the United States Department of Commerce this week.

Commerce reported that new home sales saw a 16.6 percent increase in April compared to March, which would equate into a 619,000 unit annual rate.

Sounds pretty good, right? Well, these data points help to show exactly how good it is. The April tally marks an eight-year high for its highest level going back to January 2008.  

Along with hitting a new record, Commerce data also indicated that April represents the second straight month of growth for new home sales.

What’s more, this data suggests that the U.S. housing market is returning to more solid footing as the second quarter moves along, wrote Stifel Chief Economist Lindsey Piegza in a research note. And she explained that it was driven by continued positive gains in employment, low energy costs, favorable lending conditions, and a relatively stable confidence level.

And IHS Global Insight U.S. Economist Kristin Reynolds observed that these numbers indicate the spring selling season is looking bright, with the market for new homes having regained its momentum, as combined new and existing home sales in April sold at their fastest pace since May 2007.

While it is definitely encouraging to see such strong housing data, it is perhaps even more encouraging to see what the subsequent impact of this data, especially if it turns out to be sustainable will be for freight volumes.

One reason for that goes back to a common statistic commonly mentioned at industry conferences and freight-related research reports:  a new house equals seven truckloads of materials. That said seven truckloads multiplied by the annualized 619,000 monthly new homes (based on April’s data) equates to more than 4.3 million additional truckloads.

Now, that is not to say that is exactly what will happen, but it is an encouraging number at a time when truckload capacity remains loose on a seasonal basis and any and all upticks in the economy are very welcome. 

Should housing gains continue to see material increases, that would be terrific for basically all facets of freight transportation and logistics, whether it be increased truck and intermodal volumes, even more e-commerce activity, and increase warehousing, fulfillment, and distribution operations, too. In some ways, that could be viewed as a housing-related trifecta of sorts.

Yes, it is still way too early to know or tell of that will happen, but being optimistic at a time when it is definitely needed does not hurt either. Here’s to hoping it does.