Sunday, August 27, 2017

July's durable goods, new and existing home sales

the week's widely watched releases included the July advance report on durable goods and the July report on new home sales, both from the Census bureau, and the Existing Home Sales Report for July from the National Association of Realtors (NAR)...the week also saw the release of the Chicago Fed National Activity Index (CFNAI) for July, a weighted composite index of 85 different economic metrics, which fell to -0.01 in July, down from +0.16  in June...after revisions of the index for 4 out of the last 5 months, the 3 month average of the index was at –0.05, down from +0.09 in June, which indicates national economic activity has been slightly below the historical trend over those recent months...in addition, this week saw the release of two more regional Fed manufacturing surveys for August: the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index was unchanged at +14 in August, suggesting an ongoing modest expansion of that region's manufacturing; and the Kansas City Fed manufacturing survey for July, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, which reported its broadest composite index rose to +16 in July from +10 in July and +11 in June, also suggesting an ongoing expansion in that region's manufacturing..

July Durable Goods: New Orders Down 6.8%, Shipments Up 0.4%, Inventories Up 0.3%

the Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for July (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods fell by $16.7 billion or 6.8 percent to $229.2 billion in July, the largest drop since August 2014, following a revised increase of 6.4% to $245.9 billion in June new orders, which had been originally reported as a 6.5% increase to $245.6 billion...with upward revisions to prior months, year to date new orders are still running 5.0% above those of 2015, the same year over year change we saw in this report last month...as is usually the case, the volatile monthly change in new orders for transportation equipment drove the July headline change, as those transportation equipment orders fell $17.4 billion or 19.0% to $74.3 billion, on a 70.7% decrease to $7,373 million in new orders for commercial aircraft....excluding new orders for transportation equipment, other new orders were up 0.5% in July, as new orders for nondefense capital goods excluding aircraft, a proxy for equipment investment, rose 0.4% to $63,784 million...

the seasonally adjusted value of July's shipments of durable goods, which will be inputs into various components of 3rd quarter GDP after adjusting for changes in prices, rose by $1.0 billion or 0.4 percent to $237.4 billion, after June shipments were little changed from those of May....a 0.5% increase in shipments of transportation equipment underpinned the July change, as they rose $0.4 billion to $79.2 billion... meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the twelfth in thirteen months, increasing by $1.3 billion or 0.3 percent to $398.8 billion, after the change in June inventories was revised from a 0.4% increase to a 0.5% increase...an increase in inventories of transportation equipment were a factor in the inventory increase, as they rose $0.6 billion or 0.5 percent to $129.6 billion, on a 3.4% increase to $13,149 million in inventories of defense aircraft and a 1.2% increase to $34,742 million in inventories of motor vehicles...excluding the increase in inventories of transportation equipment, all other durable goods inventories still increased 0.3% to $269,207 million...

finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but obviously volatile new orders, fell for the second time in three months, declining by $3.8 billion or 0.3 percent to $1,131.8 billion, following a June increase of 1.3% that was was revised a bit lower but was statistically unchanged.....unsurprisingly, a $4.8 billion or 0.6 percent decrease to $772.2 billion in unfilled orders for transportation equipment was responsible for the decrease, as unfilled orders excluding transportation equipment were up 0.3% to $359,617 million....compared to a year earlier, the unfilled order book for durable goods is now 0.7% above the level of last July, even as unfilled orders for transportation equipment are 0.7% below their year ago level, largely on a 1.7% decrease in the backlog of orders for commercial aircraft...   

New Home Sales Seemed to be Slowing in July

the Census report on New Residential Sales for July (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 571,000 new homes a year, which was 9.4 percent (±12.9 percent)* below the revised June rate of 630,000 new single family home sales a year and  8.9 percent (±15.4 percent)* below the estimated annual rate that new homes were selling at in July of last year....the asterisk indicates that based on their small sampling, Census could not be certain whether July new home sales rose or fell from those of June, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series....hence, these initial new home sales reports are not very reliable and often see significant revisions...with this report; sales new single family homes in June were revised from the annual rate of 610,000 reported last month to a 630,000 a year rate, and home sales in May, initially reported at an annual rate of 610,000 and revised down to a 605,000 a year rate last month, were revised up to a 618,000 annual rate with this report, while April's annualized home sales rate, initially reported at 569,000 and revised from 593,000 to 577,000 last month, were also revised back up to a 590,000 rate with this release..

the annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which showed that approximately 49,000 new single family homes sold in July, down from the 58,000 new homes that sold in June and the 59,000 that sold in May....the raw numbers from Census field agents further estimated that the median sales price of new houses sold in July was $313,700, up from the median sale price of $311,600 in June and up from the median of $295,000 in July a year ago, while the average July new home sales price was $371,200 , up from $370,000 average sales price in June, and up from the average sales price of $355,000 in July a year ago....a seasonally adjusted estimate of 276,000 new single family houses remained for sale at the end of July, which represents a 5.8 month supply at the July sales rate, up from the reported 5.4 month supply in June....for more details and graphics on this report, see Bill McBride's two posts, New Home Sales decrease to 571,000 Annual Rate in July and A few Comments on June New Home Sales...

Existing Home Sales Down 1.3% in July

the National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales fell 1.3% from June to July, projecting that 5.44 million homes would sell over an entire year if the July home sales pace were extrapolated over that year, a pace that was still 2.1% above the annual sales rate projected in July of a year ago….at the same time, June home sales at a 5.51 million annual rate were revised down from the 5.52 million rate shown in last month's report...the NAR also reported that the median sales price for all existing-home types was $258,300 in July, 6.2% higher than in July a year earlier, which they report as "the 65th consecutive monthly year over year increase in home prices".....the NAR press release, which is titled "Existing-Home Sales Slide 1.3 Percent in July", is in easy to read plain English, so if you're interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release...as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered…

since this report is entirely seasonally adjusted and at a not very informative annual rate, we like to look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month...this unadjusted data indicates that roughly 513,000 homes sold in July, down by 14.5% from the 600,000 homes that sold in June, and unchanged from the estimated 513,000 homes that sold in July of last year, so we can see there was a sizable seasonal adjustment just to bring the annualized published figures up to the level reported...that same pdf indicates that the median home selling price for all housing types fell 1.9%, from a revised $263,300 in June to $258,300 in July, while the average home sales price was $298,800, down 1.5% from the $303,500 average selling price in June, but up 4.9% from the $284,900 average home sales price of July a year ago, with the regional average home sales prices ranging from a low of $237,000 in the Midwest to a high of $393,400 in the West...for additional commentary with long term graphs on this report, see "NAR: "Existing-Home Sales Slide 1.3 Percent in July"" and "A Few Comments on June Existing Home Sales" from Bill McBride at Calculated Risk...

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)

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