April Home Sales Falloff May be Misleading
May 24, 2001
One important indicator as to the future health of trucking is new homes sales, but it may be wise not to read too much into April’s disappointing numbers.
The U.S Commerce Department Wednesday reported sales during the month fell 9.5%, the biggest drop since April 1997. The drop did not surprise most analysts, who were already forecasting a falloff. That's because the recent downturn in the economy has forced some people out of their jobs and has in turn, tightened the pool of eligible home buyers.
Also, the federal government has changed its method for calculating new home sales, which is believed to be the biggest factor for the almost double-digit drop. This makes it very difficult to compare the latest figures with previous month’s reports.
New homes sales are still believed to be healthy, thanks at least in part to interest rate cuts made this year by the Federal Reserve. One factor that could hurt new homes sales is if more people can’t afford to buy a home. While workers filing new claims for unemployment jumped more than expected last week, the four-week moving average has slipped to its lowest level in a month. Any long-term fall-off in new home sales can also likely lead to fewer new home starts.
New home sales and housing starts numbers are important to the trucking industry because many building materials and household items are moved by truck.