Vehicle Sales

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses vehicle sales.

• Late Thursday it was reported that vehicle sales rose strongly. Sales totaled 15.1 million on an annualized basis in February, the best showing in four years. If the sales pace can be sustained it would also lead to quite a nice percentage gain of 18 percent from last year.
• For comparison, total annual sales had been 10.4 million in 2009, 11.6 million in 2010, and 12.8 million in 2011.
• Vehicle sales are worth monitoring for real estate practitioners because auto purchases are usually the second most expensive item for most consumers, after a home purchase. Consumers willingness to make an auto purchase reflects a growing personal confidence of better economic conditions ahead. This sentiment could filter into the housing market.
• Because of improved auto sales, prices of new cars and trucks have been pushed up by 7 percent from the low point three years ago. Moreover, employment at auto dealer and auto parts stores has risen by 100,000 from the low point of two years ago.
• By contrast, REALTOR® membership still shows a drop from one year ago. Generally there is a much longer lag time between housing market activity and membership figures. So an improvement in home sales in 2012, which I expect to be 5 to 10 percent, will not translate into higher membership in 2012. The membership increase is likely to show up in 2013. But let’s hope there is not a notable increase in membership as happened during the housing bubble years. It is best in many respects to have a rise in home sales without an increase in membership.