July’s durable goods, new and existing home sales

This 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)…..in addition, this week saw the release of the Kansas City Fed manufacturing survey for August, which covers western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico…they reported their broadest composite index fell to +14 in August, down from readings of +23 in July and +28 in June, suggesting a slower pace of expansion in that region’s manufacturing industries..

July Durable Goods: New Orders Down 1.7%, Shipments Down 0.2%, Inventories Up 1.3%

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 $4.3 billion or 1.7 percent to $246.9 billion in July, following a revised increase of 0.7% to $251.1 billion in June new orders, which had been originally reported as a 1.0% increase to $251.9 billion of new orders…despite the July decrease, however, year to date new orders are now running 8.6% above those of 2017, a slight increase from the 8.4% 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 $4.6 billion or 5.3 percent to $82.8 billion, on a 35.4% decrease to $9,213 million in new orders for commercial aircraft and a 34.6% decrease to $4,289 million in new orders for defense aircraft….excluding new orders for ‘transportation’ equipment, other new orders were up 0.2% in July, as new orders for nondefense capital goods excluding aircraft, a proxy for equipment investment, rose 1.4% to $69,683 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, fell by $0.5 billion or 0.2 percent to $250.8 billion, after June shipments had increased by 1.6% from those of May….a 1.9% drop in shipments of transportation equipment was the reason for the July decrease, as they fell $1.6 billion to $83.9 billion, on a 25.4% decrease in shipments of commercial aircraft…excluding shipments of transportation equipment, shipments of other durable goods rose 0.6%…

Meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the eighteenth time in the last nineteen months, increasing by $5.0 billion or 1.3 percent to $408.3 billion, after end of June durables inventories were revised from $402.8 billion to $403.2 billion, now statistically unchanged from May…an increase in inventories of transportation equipment were the major factor in the inventory increase, as they rose $4.4 billion or 3.5 percent to $131.3 billion, on a 6.7% increase to $67,061 million in inventories of commercial aircraft…excluding the increase in inventories of transportation equipment, all other durable goods inventories still increased 0.2% to $276,919 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, rose for the eighth time in nine months, but by just $0.1 billion to $1,164.7 billion, which is considered statistically unchanged…that followed a June increase of 0.3% to $1,164.66 billion that was was revised from the previously reported 0.4% increase to $1,165.1 billion…..a $1.1 billion or 0.1 percent decrease to $800,775 million in unfilled orders for transportation equipment limited the overall increase, as unfilled orders excluding transportation equipment were up 0.3% to $363,951 million….compared to a year earlier, the unfilled order book for durable goods is now 3.9% above the level of last July, as unfilled orders for transportation equipment are still 3.3% above their year ago level, despite a 2.2% decrease in the backlog of orders for defense aircraft…  

New Home Sales Reported Lower 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 627,000 new homes a year, which was 1.7 percent (±14.7 percent)* below the revised June rate of 638,000 new single family home sales a year, but 12.8 percent (±15.7 percent)* above 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 or even from those in July 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 June were revised from the annual rate of 631,000 reported last month to a 638,000 a year rate, and home sales in May, initially reported at an annual rate of 689,000 and revised down to a 666,000 a year rate last month, were revised further down to a 654,000 annual rate with this report, while April’s annualized home sales rate, initially reported at 662,000 and revised from 646,000 to 641,000 last month, were also revised lower, to a 633,000 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 53,000 new single family homes sold in July, down from the 58,000 new homes that sold in June and the 62,000 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 $328,700, up from the median sale price of $310,000 in June and up from the median price of $322,900 in July a year ago, while the average July new home sales price was $394,300, up from $369,500 average sales price in June, and up from the average sales price of $372,400 in July a year ago….a seasonally adjusted estimate of 309,000 new single family houses remained for sale at the end of July, which represents a 5.9 month supply at the July sales rate, up from the reported 5.7 month supply of unsold homes in June….for more details and graphics on this report, see Bill McBride’s two posts, New Home Sales decrease to 627,000 Annual Rate in July and A few Comments on June New Home Sales

Existing Home Sales Fall 0.7% in July to Slowest Pace in 2 Years

The National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales fell 0.7% from June to July, projecting that 5.34 million homes would sell over an entire year if the July home sales pace were extrapolated over that year, a pace that was also 1.5% below the annual sales rate projected in July of a year ago, and the slowest pace in two years….June home sales at a 5.38 million annual rate were unrevised from last month’s report…the NAR also reported that the median sales price for all existing-home types was $269,600 in July, 4.5% higher than in July a year earlier, which they report as “the 77th straight month of year-over-year gains“…..the NAR press release, which is titled “Existing-Home Sales Slip 0.7 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….since 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 522,000 homes sold in July, down by 14.5% from the 570,000 homes that sold in June, but up 1.8% 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 1.5%, from a revised $273,800 in June to $269,600 in July, while the average home sales price was $307,800, down 1.3% from the $311,900 average selling price in June, but up 3.0% from the $298,800 average home sales price of July a year ago, with the regional average home sales prices ranging from a low of $240,400 in the Midwest to a high of $410,600 in the West…for additional commentary with long term graphs on this report, see “NAR: Existing-Home Sales Decline 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 picked from the aforementioned GGO posts, contact me…)     

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