Why a boost in pickup truck sales means the housing market is in for good news


The 2015 Ford F-150 Platinum. Does it presage sunnier days for the housing industry? (Ford Motor Co.)

If you want to take the temperature of the housing industry, the best place to go could be a car dealership.

Yes, you read that right. There is a strong correlation between the real estate market and auto sales – particularly when it comes to the most iconic American vehicle of all, the pickup truck.

Analysts at TD Economics forecast that trucks will be the “standout” light vehicle for the next two years after sales jumped 12 percent in 2013. That’s because pickups are the workhorse of the construction industry: As home building activity picks up, construction companies hire more people. Workers then buy trucks to get the job done.

TD Economics estimates housing starts will rise to just under 1.5 million by 2015, up from 927,000 last year. Their chart shows pickup sales should mirror that growth.

housingandpickups

That relationship could signal that the recent downturn in housing data is temporary. Construction of new homes plunged 16 percent in January, slammed in part by an unusually brutal winter. Sales of Ford trucks also fell 2.2 percent compared to the previous year.

But this week, Ford reported that its best-selling F-Series posted the strongest February in eight years. The month started off slow but a surge of purchases at the end of the month helped propel the gains. Government data on housing starts is due out until next week.

There is a chance that truck sales could overstate the case, however. The Detroit Big Three automakers all recently unveiled new models of their signature trucks (the Dodge Ram, Chevy Silverado and Ford F-150) that have reignited consumer interest in the category. And the outstanding fleet of pickups is old – reaching a record average age of 10.4 years in 2012, according to Edmunds.com. So there’s a lot of pent-up demand for new models, which could skew future sales higher.  Still, Lacey Plache, the chief economist at Edmunds.com, said she expects the rebound in housing to keep on truckin'.

(Sorry, we couldn't resist.)

“The expectation is that we’ve had a weak housing market year-to-date. But once spring comes, there will be a big bounce back. I think the same thing is true with truck sales,” she said.

 

 

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.
Comments
Show Comments
Most Read Business
Next Story
Dina ElBoghdady · March 5