By Dennis Howard – RDO Equipment – November 24, 2024 – For ConstructionPROS.com
Despite concern from many customers about the rapid changes that could happen in the immediate future, one market indicator shows some promise: demand for housing and increases in housing starts.
About a year ago, we returned to the “new normal of equipment inventory, ”where manufacturers delivered machines to dealer lots and finally allowed contractors to secure the needed equipment. We industry veterans have come to expect construction’s cyclical nature. However, the regular rhythm of this and many industries skipped a beat during the COVID-19 pandemic. One year from when we talked about most dealers’ equipment inventory recovery, we mark this year’s price volatility for new, used and rental equipment.
According to the Associated Equipment Dealers, new equipment prices are up about 30% compared to 2020, as I reported in a previously published column. Earlier in 2024, these conditions encouraged more contractors to enter the rental market to manage equipment costs, some opting for a Rental Purchase Option (RPO), which helps contractors build equity in their machine as it completes jobs.
Shortly after the U.S. Presidential election, the Federal Reserve cut its policy rate by a quarter-point on Thursday to a new target range of 4.5% to 4.75%. However, according to Freddie Mac, mortgage rates are still on the rise at the time of writing this column.
In the industry, we are well prepared to maximize efficiency by following tried and true guidelines to offset the unease of inflation, not to mention this year’s election. One of these guidelines is to turn to the used equipment market to acquire specific models. However, we should review several factors driving the pricing of used heavy equipment since the COVID-19 pandemic.