These hidden indicators suggest the US housing rebound has room to run

In Pittsburgh, they’re stocking up.
In Pittsburgh, they’re stocking up.
Image: AP Photo/Gene J. Puskar
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To build a house, you need wood.

It might not sound like the most sophisticated economic analysis. But it’s worth keeping in mind as the US housing market shows a marked uptick in strength in recent months.

Housing starts are bouncing back

…as are existing home sales.

…amid something of a relaxation in credit standards from banks.

Can it last? It seems likely. Lesser-known indicators, such as employment in the lumber industry, are rebounding, too.

And just yesterday, the Canadian National Railway Company spotlighted lumber exports to the US as a bright spot for its somewhat weak core business of lugging Canada’s commodities. The company said it is gearing up for a continued rise in US housing starts and adding additional cars to railcars to meet expected demand for wood products south of its border.

“The general economy in Canada has been more sluggish than what we’ve seen in the US,” Canadian National CEO Claude Mongeau told analysts on a post-earnings conference call. Canada’s economy contracted in the first quarter at an annualized rate of 0.6%.

This is generally the case the world over right now. With weakness in China spreading to the countries that have feasted on demand for raw materials from the People’s Republic in recent years, the US seems to be a top destination not only for wood products, but for global investors looking for growth. And that’s one of the reasons that we’re seeing the US dollar, as measured by the ICE US dollar index, up more than 8% this year.