Flatbed Report: The housing market shows signs of cooling

By Christina Ellington, DAT iQ

Have the recent interest rate hikes started to slow down the residential construction trends? In April, building permits fell m/m, decreasing by 3.2% m/m but 3.1% higher than last year. The April reading of 1.72 million housing starts (single-family and multi-family combined) fell 0.2% m/m; however, this is 14.6% higher than the prior-year and represents an additional 219,000 units. Within this overall number, single-family starts decreased 7.3% m/m to 1.1 million units, while in the multi-family sector, which includes apartment buildings and condos, increased 16.8% to an annualized 612,000 pace. 

“Today’s housing starts report is more evidence that the single-family market is slowing,” said NAHB Chief Economist Robert Dietz. “While single-family starts are up 4.1% on a year-to-date basis, we’re expecting flat conditions for the year and a decline in 2023 as housing affordability challenges in the form of higher mortgage rates and construction costs continues to worsen housing affordability conditions. Single-family permits are down 2.3% on a year-to-date basis thus far in 2022.”  Additionally, new home buyers who signed contracts in 2021 face tough financial decisions as the interest rates have nearly doubled from the time they entered into their new home contract, according to a WSJ article.

Another indicator of flatbed demand often correlates with the big box home improvement stores. Home Depot reported sales of $38.9 billion for the first quarter of fiscal 2022, an increase of $1.4 billion, or 3.8% from the first quarter of fiscal 2021. “The solid performance in the quarter is even more impressive as we were comparing against last year’s historical growth and faced a slower start to spring this year,” said Ted Decker, chief executive officer.  In contrast, Lowe’s sales for the first quarter were $23.7 billion compared to $24.4 billion in the first quarter of 2021. “Our sales this quarter were in line with our expectations, excluding our outdoor seasonal categories that were impacted by unseasonably cold temperatures in April. Because 75% of our customer base is DIY, our Q1 sales were disproportionately impacted by the cooler spring temperatures. Now that spring has finally arrived, we are pleased with the improved sales trends we are seeing in May,” commented Marvin R. Ellison, Lowe’s chairman, president, and CEO.

 

All rates cited below exclude fuel surcharges unless otherwise noted.

In Los Angeles last week, flatbed carriers were in high demand, pushing up outbound spot rates by $0.28/mile to $2.69/mile after dropping for the three weeks prior. Loads 700-miles northeast to Salt Lake City were down slightly last week, averaging $3.12/mile or around $0.15/mile lower than the previous year. Los Angeles to Las Vegas loads are currently averaging $4.16/mile, which is $0.68/mile higher than the previous year, while loads to Denver are down to $3.10/mile this week or $0.20/mile lower than the same week last year.

 Available flatbed capacity was also tighter last week in the Southeast Region, where spot rates increased by $0.12/mile to an average of $3.41/mile. In Miami, load post volumes jumped 30% w/w, driving up spot rates by 13% to an outbound average of $2.14/mile excl. FSC with loads 1,300-mile north to Elizabeth, NJ, jumping to $2.25/mile last week or $0.45/mile higher than the previous year. In the Pacific Northwest, spot rates for outbound loads in Seattle were up by $0.21/mile to an average of $2.64/mile last week. Loads south to Los Angeles were up slightly last week to an average of $2.37/mile, which is $0.34/mile higher than the previous year.

After plunging the week prior by 18%, load post volumes increased by 8% last week, 6% lower than the previous year, and 21% higher than in 2018. Flatbed carriers also took time off during International Roadcheck Week, with equipment posts dropping 12% w/w, which was almost double the w/w decrease during last year’s 72-hour safety blitz. As a result, last week’s flatbed load-to-truck (LTR) ratio bounced back to 70.41, up from 57.56. 

After dropping for the five weeks prior, flatbed rates reversed course last week, increasing by $0.01/mile to a national average linehaul spot rate of $2.61/mile excl. FSC. Flatbed spot rates are now $0.10/mile lower than the previous year but still 10% or $0.24/mile higher than in 2018.