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Construction equipment industry may see hope in housing numbers

Friday, July 24, 2009

Improving home sales could boost construction industry.
Improving home sales could boost construction industry.

Sales of existing homes rose 3.6 percent in June while housing starts also increased by 3.6 percent from the previous month, sending some signals that the housing recovery is underway and positive signs for the construction equipment and homebuilding industries.

Lawrence Yun, chief economist of the National Association of Realtors (NAR), said increases in existing-home sales occurred in all major regions of the country on the back of housing affordability and tax incentives for first-time homebuyers.

The NAR's projections that home sales will continue to grow in the coming months should be seen as a positive development in the construction equipment industry, which has been hammered by the long recession and the housing slump.

Two of the largest construction equipment manufacturers reported earnings this week showing losses for the second quarter, reflecting the suffering state of the global economy. Many analysts look to earnings reports from equipment manufacturers as a bellwether of the global economy.

Housing starts are still well below their pace in 2008, but NAR said June saw a significant drop in housing inventory that could bring demand back up.
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