Demand grows for new homes, cars and trucks
Construction business booms
Growing demand for new homes and new houses is jolting the nation’s economy in a good way.
U. S. buyers snapped up new cars and trucks in June at a pace not seen since before the recession.
And nearly 36 percent of all U.S. new homes sold in May weren’t yet under construction, close to a seven-year high and signaling sustained strength in homebuilding as companies try to catch up.
Joe Chamberlain says he can’t build homes fast enough to keep up with demand. The founder of Caprock Custom Construction in Rockwall, Texas, has yet to break ground on any of the three houses he sold in May and June.
That’s “an excellent position for a builder to be in,” said Chamberlain, who already has three homes under construction and is just starting work on another. “It ensures we’ll stay busy for a long time and make a profit.”
The housing surge will trigger purchases of everything from cement and lumber to furniture and appliances, bolstering hiring and economic growth, economist Neil Dutta predicts.
“There’s clearly more housing starts activity in the pipeline,” said Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York. “The economic outlook is getting better and there’s more household formation. With demand rising, production is going to follow.”
Of the 45,000 new houses sold in May, con- struction hadn’t begun for 16,000, according to Commerce Department data. The share of yet-tobe-built dwellings was up from 26 percent a year ago and from a recession low of 14 percent in September 2008.
And continuing demand for big pickups helped boost sales for Detroit’s automakers in June. Ford said Tuesday that its sales rose 14 percent, Chrysler’s gained 8 percent and GM’s rose 6.5 percent.
Japanese automakers reported solid gains as well. Nissan’s sales jumped 13 percent, and Toyota’s and Honda’s each rose 10 percent. South Korea’s Hyundai reported a record June, with sales up 2 percent.
Only Volkswagen’s sales dropped 3 percent, the third straight monthly dip for the German automotive company.
Auto industry analysts say they don’t see much that could slow the sales momentum of the first six months. The factors that juiced sales — low interest rates, wider credit availability, rising home construction and hot new vehicles — are likely to remain in place. So far, hiccups in the stock market, higher taxes and fluctuating gas prices haven’t dampened demand.
“I think the fundamentals for continued growth in the new vehicle sales industry are intact,” Chrysler’s U. S. sales chief, Reid Bigland, said last week.
Sales of pickups — which have been selling at a rate three times faster than the rest of the industry has — continued at a strong pace in June.