As Housing Market Improves, Related Sectors See Brighter Future

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Researched by Industrial Info Resources (Sugar Land, Texas)--The housing market has been struggling since 2007, even before the economy entered a recession. With the banking industry and the financial markets struggling for the last 20 months, the housing market has had little chance to get back on its feet. However, for the first time since 2006, the market is showing signs of a recovery. The sectors that support the housing market see this as a sign that business may soon pick up for them as well.

In a down housing market, companies that are involved in the manufacturing of siding, windows, doors, trim, carpeting, roofing products, cabinets, fittings, and other products used to construct homes have suffered as well. In addition, companies that produce appliances, lighting products and batteries have seen their businesses suffer during this period.

The most recent home price numbers have given some hope to this industry and these supporting sectors. Home prices rose 3% during the second quarter of 2009, the first quarterly increase in three years. If home prices continue to rise and if the economy continues its recovery, the sectors that support the housing market certainly will have the potential for a much nicer 2010.

Spending has been down in the housing, building products and furniture sectors since 2006. With homes not being sold or constructed, there has been no reason to invest heavily in new plants, expansions of existing plants or major upgrades to accommodate the market. Companies have been taking a "wait-and-see" attitude for the last three years, only doing absolutely necessary maintenance and replacing or adding equipment on an as-needed basis while they wait for the market to reverse itself.

If these housing numbers can continue to grow through the third and fourth quarters of this year, the companies involved in supporting housing construction will have to take a long, hard look at the potential for expenditures in the later part of 2010. While the recovery will not be immediate, the plants involved have the capability to reach certain capacity milestones without expanding; this will give them some light at the end of the tunnel in the coming year.

A complete recovery likely will not occur in 2010, simply because it is too soon and these things take time since they are affected by many outside factors, such as a stable banking and credit market. However, if the housing market continues its steady recovery into the summer of 2010, expansion could be looming by 2011 and expenditures will increase, something for which this sector has spent three years yearning.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.