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August 2012

Rail News: Rail Industry Trends

Housing market improvement shows up in lumber carload numbers; plus, freight rail traffic data

Lumber Carload Traffic In 2012's First Half Reflects Housing Market Improvement

Freight railroads' lumber carload traffic is showing signs of life so far this year, a signal that the housing construction market may finally be coming out of its long, deep slump.

Housing starts during the first five months of 2012 averaged an annual rate of 719,000, a 26 percent increase over the year-ago period, Freddie Mac officials said in a July 18 press release.

Builder confidence in the market for new, single-family homes jumped six points to 35 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) for July. The increase marked the largest one-month gain recorded by the HMI in nearly a decade, and brings the index to its highest point since March of 2007, association officials said in a prepared statement.

Builders Confident Nationwide

"Builder confidence increased by solid margins in every region of the country in July as views of current sales conditions, prospects for future sales and traffic of prospective buyers all improved," said NAHB Chairman Barry Rutenberg.

North American freight-rail traffic reflected that confidence, too. During 2012's first half, railroads transported 10.9 percent more carloads of lumber and wood products compared with 2011's first half, according to the Association of American Railroads (AAR).

That surge marked the third-largest gain in commodity carload traffic during the period: automobiles and equipment rose 17.2 percent, and petroleum products jumped 31.4 percent, according to the AAR.

In second-quarter 2012 earnings reports, some Class I officials mentioned improved housing starts as a reason for growth in building-products traffic, as well.

For example, forest products volume at Kansas City Southern increased 3 percent during the six-month period; at CSX Corp., forest products volume also rose 3 percent.


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