May’s durable goods, new homes and existing homes sales reports

the only widely watched releases of the past week were the May advance report on durable goods and the May report on new home sales, both from the Census bureau, and the May report on existing home sales from the National Association of Realtors (NAR)….in addition, this week also saw the release of the Chicago Fed National Activity Index (CFNAI) for May, a weighted composite index of 85 different economic metrics, which fell from a downwardly revised +0.05 in April to -0.51 in May…that left the 3 month average of the index at a 4 year low of –0.36, indicating national economic activity has been well below the historical trend over these recent months….we also saw the Kansas City Fed manufacturing survey for June, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, which reported its broadest composite index rose to 2 in June, up from -5 in May and -4 in April, it’s first positive reading in 16 months, suggesting that the regional contraction, mostly in energy related industries, may be ending…

May Durable Goods: New Orders Down 2.2%, Shipments Down 0.2%, Inventories Down 0.3%

the Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for May (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods fell by $5.3 billion or 2.2% to $230.7 billion in May, following a revised increase of 3.3% in April new orders, which had been originally reported as a 3.4% increase…since an annual benchmark revision has been applied since the last release, year to date new orders are nonetheless 1.7% higher than they were a year ago, vs the 0.8% year over year change we saw last month…as is usually the case, the volatile monthly change in new orders for transportation equipment drove the May headline change, as those transportation equipment orders fell $4.8 billion or 5.6 percent to $81.9 billion, partly on a 34.1% decrease to $3,713 million in new orders for defense aircraft….excluding new orders for transportation equipment, other new orders were still down 0.3% in May, as the important new orders for nondefense capital goods excluding aircraft, a proxy for equipment investment, were down 0.7% at $62,407 million…

the seasonally adjusted value of May’s shipments of durable goods, which will be inputs into various components of 2nd quarter GDP after adjusting for changes in prices, fell by $0.5 billion or 0.2 percent to $231.7 billion, after April shipments were revised from an increase of 1.5% to an increase of 0.4%…again, a downturn in shipments of transportation equipment drove the change, as they fell $0.4 billion or 0.5 percent to $80.0 billion, as the value of shipments of motor vehicles fell 3.4% to $53,675 million…excluding that volatile sector, the value of other shipments of durable goods still fell 0.1%, and are still 1.5% lower year to date than a year ago….

meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, fell for the 10th time in 11 months, decreasing by $1.1 billion or 0.3 percent to $382.5 billion, after April inventories were revised from a 0.2% decrease to a 0.4% decrease…the $0.4 billion, 0.3% decrease in inventories of transportation equipment was not the biggest factor in the decrease, however, despite the 1.1% decrease in motor vehicle inventories, as inventories of machinery fell $0.5 billion or 0.8 percent to $65.4 billion…

finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but volatile new orders, rose for the fourth time in five months, increasing by $2.0 billion or 0.2 percent to $1,139.4 billion, following a April increase of 0.6% which was essentially unrevised…a $1.9 billion or 0.2% increase to $785.2 billion in unfilled orders for transportation equipment was responsible for the increase, as unfilled orders excluding transportation equipment were statistically unchanged at $354,172 million….compared to a year earlier, the unfilled order book for durable goods is still 0.8% below the level of last May, with unfilled orders for transportation equipment 1.2% below their year ago level, on a 5.5% decrease in the backlog of orders for motor vehicles…

May’s New Homes Sales and Prices Appear Lower Than April’s

the Census report on New Residential Sales for May (pdf) estimated that new single family homes were selling at a seasonally adjusted rate of 551,000 new homes a year, which was 6.0 percent (±12.8%)* below the revised April rate of 491,000 new single family homes a year but 8.7 percent (±14.6%)* above the estimated annual rate that new homes were selling at in May of last year….the asterisks indicate that based on their small sampling, Census could not be certain whether May new home sales rose or fell from those of April or even from those in May a year ago, 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 April were revised from the annual rate of 619,000 reported last month to a 586,000 a year rate, March’s annualized home sale rate, initially reported at 512,000, was revised from last months upward revision of 531,000 back down to 522,000, while the annual rate of February’s sales, revised from 519,000 to an annual rate of 538,000 last month, were now also revised lower, to an annual rate of 525,000…

the annual rates of sales reported here are extrapolated from the estimates of Census field reps, which showed that approximately 51,000 new single family homes sold in May, down from the 57,000 new homes that sold in April….the raw numbers from Census field agents further estimated that the median sales price of new houses sold in May was $290,400, down from the median of $320,200 in April, while the average May new home sales price was $358,900, down from $378,200 average in April, but up from the average sales price of $340,800 in May a year ago….a seasonally adjusted estimate of 244,000 new single family houses remained for sale at the end of May, which represents a 5.3 month supply at the May sales rate, up from a 4.9 month supply in April….for more details and graphics on this report, see Bill McBride’s post, New Home Sales decreased to 551,000 Annual Rate in May

Existing Home Sales Rise 1.8% in May

the National Association of Realtors (NAR) reported that seasonally adjusted existing home sales rose 1.8% from April to May, projecting that 5.53 million homes would sell over an entire year if the May home sales pace were extrapolated over that year, a pace that was also 4.5% greater than the annual sales rate projected in May of a year ago, and the highest monthly annual rate since February 2007…that came after an annual sales rate of 5.43 million homes in April, which was revised from the originally reported 5.45 million annual sales rate, and an annual home sales rate of 5.36 million in March…the NAR also reported that the median sales price for all existing-home types in May was $239,700, which topped the record $236,300 median price set last June and was 4.7% higher than a year earlier, which they report is “the 51st consecutive monthly year over year increase in home prices”……the NAR press release, which is titled Existing-Home Sales Grow 1.8 Percent in May; Highest Pace in Over Nine Years, 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 usually look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month…this data indicates that roughly 526,000 homes sold in May, up by 11.9% from the 470,000 homes that sold in April and 6.3% more than the 495,000 homes that sold in May of last year, so we can see there was again a seasonal adjustment in the annualized published figures of over 10% to correct for the typical springtime increase in home sales…that same pdf indicates that the median home selling price for all housing types rose 3.8%, from a revised $230,900 in April to $239,700 in May, while the average home sales price was $281,700, up 3.0% from the $273,600 average in April, and up 3.2% from the $273,000 average home sales price of May a year ago, with the regional average home sales prices ranging from a low of $220,800 in the Midwest to a high of $373,000 in the West…for additional coverage with long term graphs on this report, see “Existing Home Sales increased in May to 5.53 million SAAR” and “A Few Comments on May 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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